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Netflix’s new deal to keep Friends on its platform was one talking point during AT&T chairman and CEO Randall Stephenson’s appearance at a big media investor conference on Tuesday.
After a social media-driven frenzy, Netflix had confirmed Monday that Warner Bros. TV hit comedy Friends will remain on its streaming service throughout 2019, putting an end to fears that it would be leaving as of Jan. 1. But Friends was widely expected to move to WarnerMedia’s planned streaming platform, set to launch in the fourth quarter of 2019, in 2020. The AT&T boss’ comments on Tuesday clarified though that the deal was not exclusive, signaling it could be for more than a year.
“They re-signed Friends…. They re-signed it on a non-exclusive basis,” Stephenson said about Netflix at the 46th annual UBS Global Media and Communications Conference in New York. “What does that mean? It means Friends can go on our platform as well.” He didn’t disclose terms of the deal, such as how long the show will run, during his conference appearance or when asked by THR afterward.
Asked about WarnerMedia’s thinking about keeping key content for its streaming platform, Stephenson said Friends is the kind of “content that we would definitely want on our platform, and it is obviously very important to Netflix as well…. Is it necessary to be exclusive to WarnerMedia on their product? No, it’s not necessary, it’s just important that we have the content.”
But he also emphasized that “every deal is going to be a little bit different,” adding that the company wants to ensure it can offer appealing content but doesn’t necessarily want to disrupt existing distributors.
AT&T completed its $85 billion acquisition of Time Warner on June 14 and then changed the entertainment division’s name to WarnerMedia, with its HBO, Turner and Warner Bros. divisions set to compete against Netflix amid cord-cutting and a turn by consumers to streaming services.
The AT&T boss reiterated that the telecom giant’s John Stankey-led WarnerMedia unit would launch a Netflix competitor in the fourth quarter of 2019 and feels it will be “a very impressive product” that will reach “very high penetration.”
“The goal…is not to become another Netflix, and not to create a direct to consumer product that rivals Netflix in terms of becoming a warehouse of content,” Stephenson added.
He had on Thursday said at an analyst day that WarnerMedia’s direct-to-consumer streaming service, which will launch in beta form in the fourth quarter of 2019, would have three tiers of service: a starter movie package, a premium service with original programming and blockbuster movies, and a third service bundling content from the first two packages with library content and eventually more content licensed from third parties.
“Is it a U.S.-only platform? In the beginning, yes,” Stephenson said Tuesday, signaling a potential push abroad over time. But he noted “complicated relationships” with distributors in foreign markets, saying some of them are “very deep and important, such as Sky,” whose Sky Atlantic network is the home of HBO programming in the U.K. Some of these relationships are “very, very important, so you don’t want to disrupt them,” Stephenson added in a comment that conference attendees took to mean HBO content was likely to remain on Sky even if WarnerMedia rolls out its streaming service abroad, and even though the European pay TV giant is now owned by Comcast.
Stephenson was not asked about the debacle with the hyped pay-per-view golf showdown on Nov. 23 between Tiger Woods and Phil Mickelson, when AT&T’s WarnerMedia unit whiffed on technical details. Some viewers who paid $20 for live streaming were denied access, necessitating that the pay wall be lifted.
The AT&T boss was also asked about Thursday’s start of the hearings in the Justice Department’s appeal of a ruling that allowed the telecom giant to complete the Time Warner acquisition.
Asked about the appeal process, Stephenson reiterated that the company expects a decision in the first quarter and that the judge “wrote a pretty tight order” that should stand up on review. AT&T is “anxious to get this piece of it behind us,” he said.
AT&T CFO John Stephens recently said that the company was “very confident” that it would prevail, and that it expects a ruling in the first quarter of 2019. “I don’t spend a lot of time on it; neither does my boss,” he said. “Our general counsel does…. Quite frankly, we are very confident that the decision will be upheld.”
AT&T and Time Warner in September told the D.C. Circuit Court of Appeals in a brief that there was no good reason to unwind the merger between the companies on antitrust grounds. The Justice Department is pursuing the appeal after U.S. District Court Judge Richard Leon handed down his judgment in favor of AT&T. The government was unable to prevail on its contention that the mega-deal would lead to hundreds of millions of dollars more in annual consumer payments for such Turner networks as TNT, TBS and CNN.
The government is bringing to the appeals court the issue of whether Leon ignored economic logic in blessing the merger, but without any “clear error,” AT&T and Time Warner say the judgment must be upheld.
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