HBO Max closed 2021 with 46.8 million domestic subscribers when combined with linear HBO, an annual gain of 5.3 million over 2020, parent AT&T disclosed in its fourth-quarter earnings report.
Globally, subscriber levels increased 13.1 million last year to 73.8 million by year-end, as the company had reported earlier this month. Aside from putting the company ahead of its internal forecasts, the growth was the biggest subscriber increase in a single year in HBO’s 50-year history, AT&T said. In that early-January report, the company had not provided a domestic-international breakdown for HBO and HBO Max, though it does provide that on a quarterly basis. Domestic revenue per subscriber was $11.15.
AT&T is about to combine WarnerMedia with Discovery in a $43 billion merger that is awaiting the final blessing of regulators. In its earnings release, AT&T said it now expects the transaction to close in the second quarter, which is sooner than the mid-2022 guidance it had given since proposing the deal in May 2021.
The parent company beat Wall Street estimates for the fourth quarter, with adjusted earnings of 78 cents share coming in two cents ahead of forecasts. Revenue reached $41 billion, which was down 10% from $45.7 billion in the prior-year period but ahead of estimates for $40.4 billion.
At WarnerMedia, revenue increased 15% in the quarter to $9.9 billion, with direct-to-consumer subscription revenue climbing 11.5%.
AT&T’s revenue was $41 billion in the quarter ending December 31, while earnings per share totaled 78 cents. Both figures exceeded Wall Street analysts’ estimates.
HBO Max launched in May 2020 and WarnerMedia rolled it out internationally in June 2021. The company added a cheaper, ad-supported tier at that same time. The quarterly results did not include a breakdown of how many subscribers opted for the ad-supported tier.
AT&T cited the negative impact of divested businesses, mainly U.S. video in the third quarter and Vrio in the fourth quarter. The company spun off pay-TV operator DirecTV, which it had acquired in 2015, into a separate entity 30%-owned by private equity firm TPG. It sold Vrio, its Latin America unit, to holding company Grupo Werthein, last summer.
At WarnerMedia, content and “other” revenue jumped 45% in the quarter to $4.4 billion, which the company credited to higher TV licensing and theatrical box office. Advertising revenue slipped 13% to $1.6 billion due to tough comparisons with the political frenzy of 2020 on CNN and other outlets.
Operating income at WarnerMedia fell 38% to $1.6 billion, reflecting ongoing investments in HBO Max, among other expenses.
AT&T said it will host a virtual event for analysts in the first half of March. It expects to offer forecasts for the company once its core wireless and telecom assets are fully separated from entertainment and video. Along with WarnerMedia and DirecTV, AT&T last December announced plans to sell advertising platform Xandr (whose name is flip shorthand for Alexander Graham Bell) to Microsoft.
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