HBO Max Shows Worth In Earnings Report — Could It Provide A Boost For AT&T In New Price Hike War?

Telecommunications and media company AT&T Inc. T saw shares fall on Wednesday after reporting quarterly financial results. The drop came as the company’s guidance came in lower than expected.

Could investors be missing a stellar quarter from the company’s HBO Max streaming platform?

What Happened: AT&T reported fourth-quarter revenue of $41.0 billion, beating a Street estimate of $40.4 billion. The company’s earnings per share of 78 cents also beat Street estimates of 76 cents per share.

Company guidance for fiscal 2022 earnings per share of $3.10 to $3.15 fell shy of Street estimates of $3.21.

Overshadowed by the weaker guidance was a strong report for HBO Max. Fueled by offering several big movie releases, HBO Max hit 74 million subscribers to end fiscal 2021. Of the total, 46.8 million subscribers come from the U.S. region, which has higher average revenue per user.

Big movies such as “Dune” and “The Matrix Resurrections” were released on the streaming platform in the fourth quarter.

AT&T’s subscribers for HBO and HBO Max were up by 13 million compared to the fourth quarter of 2020. U.S. subscribers were up by 5.3 million versus the prior year-end period.

The strong performance of HBO Max led to direct-to-consumer subscription revenue being up 11.5% year-over-year in the fourth quarter.

Related Link: Why The Discovery, AT&T Deal Poses A Credible Threat In Streaming Wars 

Why It’s Important: HBO Max faced some criticism when it launched at a price point above streaming rivals such as Netflix Inc NFLX and Disney+ from Walt Disney Co DIS.

Netflix recently announced it was raising prices of its plans, which was highlighted by AT&T CEO John Stankey Wednesday.

“We said the market was going to come to us on pricing and lo and behold, we are no longer the high-priced offer in the market,” Stankey said. “The nice part about that is we think it’ll allow us to have domestic growth as we move forward.”

HBO Max costs $15 a month or $10 per month with ads. Netflix plans now cost $15.50 per month for its standard plan and $20 a month for its 4K plan.

WarnerMedia CEO Jason Kilar tweeted that HBO Max is up more than 35% in the last 24 months and the subscriber figure is four years ahead of original projections.

Kilar also highlighted that the growth of HBO Max was outpacing the growth of rival Netflix during a CNBC interview. Netflix ended the recently reported quarter with 222 million paid subscribers.

HBO Max is outpacing early expectations for the streaming platform and the continued release of big-budget movies and shows could help boost subscriptions further. The new price points of Netflix may not bring immediate subscribers over from Netflix but could highlight the value proposition of HBO Max versus rivals.

T Price Action: ATT shares are down 0.23% to $24.19 Thursday afternoon at publication. Shares have fallen nearly 10% over the last week.

Photo:  HBOMax courtesy WarnerMedia