By Thomas Gryta
AT&T Inc. is teaming up with media mogul Peter Chernin to
invest in online programming, as the carrier increasingly sees its
future entwined with video.
The agreement codifies an informal relationship in which the
partners had talked about deals for roughly a year, including an
unsuccessful bid for the video-streaming service Hulu LLC, Mr.
Chernin said in an interview.
While the partnership could take a number of directions,
AT&T and the Chernin Group are committing more than $500
million to the venture, which will look for opportunities to
acquire, invest in or launch online video businesses.
The deal highlights AT&T's growing interest in so-called
over-the-top offerings of content that can be delivered to mobile
devices as well as via its U-verse broadband service. AT&T also
sells traditional pay TV service via U-verse that has become
increasingly competitive with cable industry rivals.
"We intended to put a significant amount of money into making a
significant play in this space," said John Stankey, AT&T's
chief strategy officer.
Neither company would comment on the kind of companies they
planned to acquire. "It may involve a combination of acquisitions,
it could be things we start up, it could be mergers of things,"
said Mr. Chernin, former president of News Corp, publisher of The
Wall Street Journal. "I think there is a limitless potential
playing field."
The companies said they may launch a number of different
offerings through the venture, including niche content or a premium
product similar to Netflix, in addition to developing models for
new distribution platforms.
The venture will lean on the Chernin Group for expertise in
content and operational issues like managing subscription services,
while AT&T will provide distribution, networks and marketing,
the executives said.
AT&T is becoming more aggressive about upgrading its
broadband network amid the looming merger of Comcast Corp. and Time
Warner Cable, a $45 billion deal that would combine two of the
country's biggest broadband and cable providers.
AT&T thinks there is still room to grow in traditional pay
television, but has said it is agnostic in how its customers
consume video, whether over the Internet or through pay TV.
Increasingly, subscribers want the video they have available at
home to be accessible on mobile devices, Mr. Stankey said.
"We are very interested in gaining scale in the content space,"
he said.
Write to Thomas Gryta at thomas.gryta@wsj.com
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