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AT&T Earnings: WarnerMedia Revenue Was Just Shy of $10 Billion in Q4

WarnerMedia-Discovery merger set to close in second quarter of 2022

The final year of AT&T’s WarnerMedia ownership concluded with a bit of a bang and a bunch of expenses. The fourth quarter of 2021 was strong, revenue-wise, for the mobile company’s entertainment segment.

WarnerMedia drew $9.9 billion in fourth-quarter revenue, an increase of 15.4% from the comparable quarter in 2020. Much of that was HBO Max-subscription driven.

WarnerMedia’s direct-to-consumer subscription revenues rose 11.5% in the fourth quarter. Overall, subscription revenues were up 5.4%. Thank Max, primarily, for both of those stats. (HBO and HBO Max combined for 46.8 million domestic subscribers at the end of Q4, up from 41.5 million one year ago.)

That’s good news for AT&T and its shareholders, sure, but also for Discovery, Inc., which will soon be merging with WarnerMedia, pending regulatory approval.

We got a slight update on that merger timing this morning: Warner Bros. Discovery should be finalized in the second quarter of 2022. It was always going to be by mid-year, so Wednesday’s update means we can now forget about the slight chances of a Q1 closure.

WarnerMedia ad sales sunk nearly 13% in the fourth quarter of 2021 without the election advertising spend that continued into November 2020. WarnerMedia is the home to CNN, as well as Turner networks TNT, TBS and truTV.

WarnerMedia’s Q4 operating expenses soared 38% on higher marketing costs and content spend. If we’re going to praise Max for the revenue increases, we have to fairly attribute blame to the SVOD service here.

Wall Street forecast Q4 earnings per share (EPS) of 76 cents on $40.43 billion in revenue, according to a consensus compiled by Yahoo Finance. On Wednesday, AT&T reported adjusted EPS of 78 cents on $41 billion in revenue.

Overall, AT&T revenues declined just over 10%, however a significant portion of that decline can be attributed to the company’s spinoff of DirecTV in July.

Earlier this month, AT&T revealed that HBO and HBO Max combined for 73.8 million global subscribers by the end of the fourth quarter. Thank “Sex & the City” sequel series “And Just Like That,” the third season of “Succession,” “The Matrix Resurrections” and “King Richard” for a particularly strong late push. (“Dune” was the big Warner Bros. film in theaters in Q4, “The Many Saints of Newark” was less of a success.)

Though we did not receive a global-subscribers update in Wednesday’s financial filing, the momentum hasn’t seemed to slow in early 2022: HBO Max’s special “Harry Potter 20th Anniversary: Return to Hogwarts” is off to the platform’s best start since the “Friends” reunion, HBO said weeks ago.

WarnerMedia launched its ad-supported version of HBO Max, which costs $9.99 per month, on June 2, more than a year after the commercial-free option debuted in May 2020.

“A year and a half ago, we began simplifying our business to reposition AT&T for growth and we’re extremely pleased with how we’ve executed on that commitment,” John Stankey, AT&T CEO, said in a statement accompanying his company’s financials on Wednesday. “We ended 2021 the way we started it – by growing our customer relationships, running our operations more effectively and efficiently, and sharpening our focus. Our momentum is strong and we’re confident there is more opportunity to continue to grow our customer base and drive costs from the business.  

“We’re at the dawn of a new age of connectivity,” he continued. “Our focus now is to be America’s best connectivity provider and also ensure our media assets are positioned to grow and truly become a global media distribution leader. Once we do this, we’ll unlock the true value of these businesses and provide a great opportunity for shareholders.”

Shares of AT&T stock (T) closed Tuesday at $26.48 per share. The U.S. stock markets reopen at 9:30 a.m. ET this morning.

AT&T executives will host a conference call at 8:30 a.m. ET/5:30 a.m. PT to discuss the company’s fourth quarter and full-year 2021 performance in greater detail.

Additionally, the company is planning to host a virtual analyst event in the first half of March “to provide additional insight and expectations for financial and operational performance of the communications company following the close of the pending WarnerMedia transaction.”