AT&T's Focus on Dividends, Not Creating Content in DTC Offering, Says BTIG

AT&T’s focus on shareholder dividends stands in the way of ambitions to build a scaled direct-to-consumer business (see 1810100038) to rival Netflix, BTIG's Walter Piecyk wrote investors Wednesday evening. Thursday, the company didn't comment. Piecyk cited AT&T’s discussion of its DTC content strategy at an investor meeting -- to forgo WarnerMedia licensing revenue in favor of exclusive content -- and then its course reversal Monday to re-license Friends to Netflix for $100 million. “We wonder why investors should expect AT&T to show any resolve in future content decisions given the size of Netflix and Amazon’s checkbook and the likely entrance of Apple and Disney into the DTC market,” said Piecyk. The Time Warner acquisition was pitched to investors as an opportunity to expand the market for WarnerMedia content by leveraging AT&T’s wireless and advertising capabilities, said the analyst. Piecyk quoted BTIG's Richard Greenfield in October: “Content like Friends is likely to disappear from Netflix in 2019 as WarnerMedia launches its own SVOD service.” A Twitter panic set in over the weekend as fans reacted to news on the Friends Twitter page that the popular syndicated show was leaving Jan. 1. Calm was restored with a screen grab of the Ross character tweeting Monday: “The Holiday Armadillo has granted your wish: ‘Friends’ will still be there for you in the US throughout 2019.” BTIG questioned how investors should think about losing high-profile syndicated content as more content creators launch their own subscription VOD services and how actors in those syndicated shows will feel about “their content reaching a fraction of the subscribers they currently do on Netflix.”