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AT&T Q2 Earnings Impress Wall Street, After HBO and HBO Max Add 2.8 Million Subscribers

Recent film premieres and a new ad-supported subscription tier likely helped HBO Max gain a large number of new subscribers over the last few months.

Friends Reunion HBO Max Matthew Perry Jennifer Aniston

“Friends: The Reunion”

Courtesy of HBO Max

AT&T impressed Wall Street with a strong Q2 earnings report on Thursday, which included the news that the conglomerate added 2.8 million subscribers between HBO and the HBO Max streaming service.

The subscriber growth at HBO and HBO Max helped AT&T exceed Wall Street’s financial expectations for the company’s Q2; AT&T’s revenue rose to $44 billion, a 7.6 percent increase that surpassed analyst expectations of $42.67 billion, according to Refinitiv data obtained by CNBC. The subscriber gains were similar to those reported during AT&T’s Q1 earnings report, when the company stated that HBO and HBO Max had gained 2.7 million subscribers, which indicated a strong surge in interest for HBO Max following the streamer’s shaky launch last year.

As with most of the company’s earnings reports, AT&T did not specify how many of the subscriber gains were specifically for HBO Max.

Still, Thursday’s report on strong subscriber growth caused AT&T to raise its forecast for global HBO Max subscriber growth from 70 million to 73 million by the end of the year, an increase from its prior estimate of 67 to 70 million subscriber additions. AT&T’s stock was up 0.47 percent at press time.

HBO Max underwent a major development in June when AT&T rolled out a cheaper, ad-supported subscription option for the streaming service. The standard, ad-free HBO Max subscription tier costs $14.99 per month, making it one of the most expensive streaming services on the market. The ad-supported tier of the service costs $9.99 per month but does not feature the same-day premiere for films debuting in theaters.

Another likely factor in HBO Max’s continued subscriber growth is the company’s decision to simultaneously premiere its new Warner Bros films in theaters and on HBO Max. Though the decision caused controversy in Hollywood when it was announced last year, recent films such as “Godzilla vs. Kong” and “Mortal Kombat” likely helped HBO Max see a surge in subscribers during Q2 (while still hauling in strong theatrical grosses, especially during the pandemic).

On the television side, HBO Max generated considerable interest in Q2 thanks to the premiere of the long-awaited “Friends: The Reunion” unscripted special. HBO Max also bulked up its comedy library in Q2 via the Jean Smart-led “Hacks,” which received critical acclaim, as well as the sketch comedy series, “That Damn Michael Che.” Both titles have been renewed for second seasons.

While the gains at HBO and HBO Max largely defined AT&T’s latest earnings report, the conglomerate likely won’t be managing those entities for much longer: AT&T reported its second quarter earnings around two months after the company announced its intent to spin off WarnerMedia, which includes assets ranging from HBO and HBO Max to CNN, TNT, TBS, Cartoon Network, and the Warner Bros. film and TV studios, and merge it with rival company Discovery, Inc. That deal is expected to close in mid-2022; at that time, AT&T will effectively be out of the entertainment and news media businesses.

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