AT&T introduces itself as “modern media company”

In its first earnings call since completing the acquisition of Time Warner, AT&T formally introduced itself as a “modern media company” and explained how it will unleash the power of combining its large customer base, network and extensive library of TV shows and movies.

The results of the second quarter pointed, once again, to why AT&T sought to buy the New York-based media company, which it renamed Warnermedia.

The deal was valued at nearly $109 billion, including debt. Revenues for AT&T declined slightly in the second quarter from $39.8 billion to $39 billion for the same time a year ago, and it continues to be under cost pressure as customers opt for lower-priced streaming services instead of pricier traditional TV products.

While its Directv Now service added 342,000 new customers in the second quarter, the loss of traditional TV customers lowered its net gain to only 80,000.

Warnermedia, on the other hand, saw increased revenue driven by subscriptions and advertising in each major part of its business — Turner Broadcasting, HBO and Warner Bros.

AT&T CEO Randall Stephenson said on a conference call broadcast from Warnermedia’s New York City headquarters that he’s not surprised by the flurry of media consolidation as companies try to keep pace with consumers’ changing entertainment habits. He said he’s glad the telecom giant made its own moves: acquiring Warnermedia, which has a portfolio of live sports, news and popular original TV series, and then buying Appnexus, an ad technology company that will help it develop more targeted and personalized ads.

“We’ve now assembled the key elements of a modern media company,” he said.

From Amazon to Netflix, he said every media company is fixated on how to create and deliver the best entertainment experience for customers. “But just owning great content is no longer sufficient,” he said.

Here are some of AT&T’S goals for the months ahead:

• Creating more original content: John Stankey, the new chief executive of Warnermedia, would not say how much money AT&T will pour into creating new content at HBO, but he said it needs more.

• Launching innovative advertising: Brian Lesser, AT&T’S first CEO of advertising and analytics, AT&T will experiment with innovative approaches to advertising. For example, he said, a Directv customer could get an interactive ad delivered on his or her phone during a TV commercial.

• Offering up a TV product for everyone: AT&T has been deliberate in rolling out video products at various price points, said John Donovan, CEO of AT&T Communications. It now has two streaming services: Directv Now, which starts at $35 per month, and Watchtv, which starts at $15 per month and is free on some unlimited plans.