How AT&T became the world’s most indebted company (and what HBO has to do with it)

by Lisa Baker

Shopping, shopping and more shopping. This is how the telecommunications giant AT&T has become the world’s most indebted company.

In recent years, the company’s executives have not hesitated to pull their checkbook to grow and land in sectors with a future that go beyond its basic telecommunications business.

It is not a secret that big technology companies have long had the content and streaming industry in their sights as the place to diversify their business and attract a larger audience to the Internet.

Its debt amounts to almost US $ 180,000 million between different financing vehicles. The figure far exceeds the GDP of Ecuador and Bolivia combined.

And in mid-2018 he starred in one of the largest mergers in corporate history , taking over the entertainment group Time Warner for approximately $ 86 billion.

In Mexico alone, between 2014 and 2015 it acquired two companies in the country: Iusacell and Nextel, for about US $ 4,000 million.

“AT&T, market leader in almost all of its businesses, has valuable assets, predictable income, healthy margins and a consistent long-term investment practice,” praised the rating agency Moody’s in a report and later recalled that the immense debt it represents a strong risk for the future.

New platform

The hope is HBO and the growing streaming market in which AT&T wants to position itself.

It is with this platform that the telecommunications giant wants to enter the battle against Netflix, Amazon Video, Apple and the new Disney + offer.

Experts believe that after the incorporation of Time Warner under its brand, the American will have no shortage of weapons to attract subscribers to its services, in an increasingly disputed business.

And is that with the purchase of Time Warner, AT&T has also incorporated the networks CNN, TNT and TBS as well as other valuable companies in the world of entertainment and the Warner Bros film studio that owns franchises such as Harry Potter, DC Comics movies or Cartoon Network.

This means hours and hours of content that the operator wants to offer through HBO Max, a platform that is scheduled to be launched in May 2020 and that will combine the entertainment offerings of HBO and Turner.

Latin America and Spain should get local versions later that year or early next.

Its price will be the highest among all streaming players .

According to NBC News, the service will debut at a price of $ 14.95 a month, which could dampen consumers’ appetites.

The CEO of the company, Randall Stephenson, defended this price arguing the wide catalog and the quality of this.

Not surprisingly, HBO and Warner Media have the series The Big Bang Theory , Game of Thrones , Sesame Street , The Sopranos and Sex and the City .

It will also steal from Netflix one of the most watched series on its platform: Friends , while investing between US $ 1.5 billion and US $ 2 billion in producing its own content in the next 2 years.

The goal is to reach 50 million subscribers by 2025.

HBO Max will also add news, live sports and cartoon programming for kids through Cartoon Network and Looney Tunes.

In total, HBO Max will have 1,800 movies on the same day of its release, that is, about 10,000 hours of content .

These include the sagas of The Matrix , The Hobbit , The Lord of the Rings and DC Entertainment films such as Batman or Superman .

The basic Netflix subscription in the United States is $ 8.99 per month, the same price as Amazon Video.

Disney + costs US $ 6.99 / m, which includes full access to its catalog with four screens and no ads, while AppleTV costs US $ 4.99 / m.

“AT&T needs to find the right balance between price and content in order to outperform Netflix, Amazon.com, Hulu, Disney and NBCUniversal,” explains Bloomberg Intelligence Senior Analyst John Butler.

“Before its acquisition by AT&T, Time Warner’s HBO affiliate had trouble attracting a sizable audience for its streaming app , HBO Now, suggesting that the service did not have enough engaging content,” he says.

But beyond subscribers, Bloomberg Intelligence analysts recall that AT&T will use its customer data to place targeted advertising , a business that generates significant revenue each year.

So, with debt maturities approaching $ 9.2 billion in the next 12 months, the company will have to run all of its divisions at full capacity or, as many warn, sell some of its most coveted assets.

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