Click to Skip Ad
Closing in...

AT&T spearheads a $500 million venture to kill cable and take on Netflix

Published Apr 22nd, 2014 11:46AM EDT
AT&T Chernin Group $500 Million Investment

If you buy through a BGR link, we may earn an affiliate commission, helping support our expert product labs.

AT&T knows that it can’t beat over-the-top content providers such as Netflix and Amazon, so it figures it might as well join them. AT&T announced on Tuesday that it has joined with the Chernin Group media holding company to invest $500 million in a new venture that will “acquire, invest in and launch over-the-top (OTT) video services.” This is particularly interesting because it’s the first time we’ve really seen a company that offers pay TV services make this kind of big investment in over-the-top video. Cable companies such as Comcast and Time Warner Cable have traditionally done their best to wall off live cable TV programs from the Internet, but the popularity of over-the-top services such as Netflix, Hulu and Amazon Instant Video has apparently grown too big for AT&T to ignore. The company’s press release announcing the venture follows below.

The Chernin Group and AT&T Create New Venture to Acquire, Invest in and Launch Online Video Businesses

DALLAS & LOS ANGELES–(BUSINESS WIRE)–AT&T* and The Chernin Group, which manages and invests in media businesses around the world, today announced the formation of a venture to acquire, invest in and launch over-the-top (OTT) video services. The Chernin Group and AT&T have committed over $500 million in funding to the venture. Further financial terms of the transaction have not been disclosed.

This alliance positions AT&T and The Chernin Group to take advantage of the rapid growth of online video and OTT video services, with each party bringing significant and complementary strengths. The strategic goal of this initiative will be to invest in advertising and subscription VOD channels as well as streaming services.

“AT&T and The Chernin Group are combining our skill sets to address the growing consumer demand for accessing content how and when they want it,” said John Stankey, Chief Strategy Officer at AT&T. “Combining our expertise in network infrastructure, mobile, broadband and video with The Chernin Group’s management and expertise in content, distribution, and monetization models in online video creates the opportunity for us to develop a compelling offering in the OTT space.”

The Chernin Group brings assets as well as expertise to the venture, including contribution of its majority stake in Crunchyroll, a leading subscription video on demand service.

“A critical part of The Chernin Group’s strategy has been our significant focus on the online video industry, and joining forces with AT&T only further underscores our strategic commitment in this area as operators, investors and programmers,” said Peter Chernin, Chairman and CEO, The Chernin Group. “Consumers are increasingly viewing video content on their phones, tablets, computers, game consoles and connected TVs on mobile and broadband networks. AT&T’s massive reach on those platforms across mobile and broadband and their commitment to the online video space make them the perfect fit for this venture with us.”

AT&T’s network resources bring enhanced opportunities for this new content alliance to create compelling offerings for consumers. AT&T has invested more than $119 billion in the United States over the last six years in part to stay ahead of the exploding consumer demand for wireless and wireline broadband data consumption, with more than 50% of global Internet traffic driven by video. AT&T has over 110 million wireless subscribers, more than 16 million total broadband subscribers, is a leader in connected devices and continues to win awards for its wireless and wireline services. J.D. Power awarded AT&T the “Highest Ranked Customer Service Performance Among Full-Service Wireless Providers” and “Highest Satisfaction with the Purchase Experience among Full-Service Wireless Providers” in their 2014, Volume 1 studies.1

*AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.

AT&T received the highest numerical score among full service wireless providers in the proprietary J.D. Power 2013 (Vol. 2) and 2014 (Vol. 1) Wireless Customer Care Full Service and Full Service Wireless Purchase Experience StudiesSM. Study based on 7,195 (Customer Care) and 8,525 (Purchase Experience) consumer responses measuring 4 full service wireless providers and measures opinions of consumers who purchased a wireless product or service within last 6 months. Proprietary study results are based on experiences and perceptions of consumers surveyed July-December 2013. Your experiences may vary. Visit jdpower.com.

Brad Reed
Brad Reed Staff Writer

Brad Reed has written about technology for over eight years at BGR.com and Network World. Prior to that, he wrote freelance stories for political publications such as AlterNet and the American Prospect. He has a Master's Degree in Business and Economics Journalism from Boston University.