by Conan Simmons – January 26, 2021 – 3:48 pm
It is being reported by the Hollywood Reporter that a new live action television series based on J.K. Rowling’s “Harry Potter” series is in early stages of development at HBO Max. It remains to be seen if it will feature the famous kid wizard or a new character in the world of Hogwarts.
Unlike the controversial decision to release their entire 2021 film slate day-and-date on the streaming service, this new development is exactly what HBO Max needs to be competitive against the powerhouses of Netflix and Disney+. While those services offer hit series like ‘Stranger Things’ and ‘The Mandalorian’ they will most likely soon be joined by Amazon when the new ‘Lord of the Rings’ series debuts later this year.
While ‘Wonder Woman 1984’ underperformed and the release of ‘The Little Things’ is geared more towards awards season rather than box office returns, WarnerMedia does look to have a hit coming in March with the release of ‘Godzilla vs. Kong’. WarnerMedia was able to work out a deal with the production company Legendary Pictures and an exciting trailer dropped online over the weekend.
Meanwhile WarnerMedia’s parent company AT&T is struggling with over $160 billion in debt.
AT&T bought Time Warner in 2016 for over $85 billion in a deal that was finalized in 2018. The media company was then rebranded as WarnerMedia. Coupled with AT&T’s 2015 purchase of DirecTV for $67 billion, AT&T reached a record high debt of $190 billion.
In recent months AT&T has been fielding offers to sell off its DirecTV satellite service, potentially to a private equity company. A deal would include AT&T Now and the recently defunct AT&T U-Verse. DirecTV has, as of third quarter 2020, 17 million subscribers whereas AT&T Now has less than 1 million. Any potential deal is not expected to include DirecTV’s Latin American business.
In contrast, HBO Max has 38 million subscribers but only 12.6 million have activated their accounts. That means less than a third of customers who receive the service actually use the service.
It’s not all bad news for AT&T and WarnerMedia.
AT&T has been able to pay down nearly $30 billion of that record high debt bringing their total debt closer to $164 billion. Factoring in lower interest rates and the time spread of when portions of the debt comes due, it does bend favorably for AT&T.
However, AT&T reportedly walked away from a $15 billion offer for DirecTV. Rumors are that if it did sell for that price to a private equity firm like Apollo, then AT&T would likely lend the Apollo the money to make the purchase. If the buyer sends DirecTV into bankruptcy or otherwise fails DirecTV would revert right back into AT&T’s ownership.
Regardless, once DirecTV does sell that should bring AT&T’s debt down by anywhere from $30 to $60 billion. That would leave at least $100 billion still in debt which could be wiped away if rumors of a possible merger of WarnerMedia with NBCUniversal, a subsidiary of Comcast, leave the speculative rumor mill and come to fruition.
Wall Street analysts have been howling recently that such a merger would be a boon for WarnerMedia in part by providing more in demand content to HBO Max. AT&T has been under pressure by many on Wall Street, including activist hedge fund Elliot Management, to divest assets. While the DirecTV sale will most likely happen in the first half of 2021 any merger between WarnerMedia and NBCUniversal is highly unlikely to happen in the near future.
As for the ‘Harry Potter’ series in development at HBO Max, don’t expect it until 2025 unless a merger does happen. WarnerMedia currently has licensed television and streaming rights to NBCUniversal until that contract expires in 2025.
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