AT&T and The Chernin Group announced plans to invest $500 million to create a new venture that will acquire, invest in and launch over-the-top video services.
The companies said the goal of the venture will be to invest in both ad-supported and subscription-based VOD channels as well as streaming services. The idea is to launch new Internet-video services, rather than deliver a “virtual pay-TV” service that would be designed to compete with traditional cable or satellite TV, an AT&T rep said.
As part of the pact, Chernin Group will contribute its majority stake in Crunchyroll, a subscription VOD service focused on anime content.
Additional financial terms of the deal were not been disclosed, and the companies did not announce launch timing or other details of the partnership.
AT&T and Chernin Group previously had paired up in an unsuccessful bid for Hulu last year, before Hulu’s parent companies — Disney, 21st Century Fox and NBCUniversal — decided to retain their ownership stakes. The two companies also pacted on “@SummerBreak,” a social-media reality series about teens in the L.A. area that will return this June for a second season, which features product placement for AT&T’s mobile wares.
By joining forces, the companies will have a larger pool of cash to go after new opportunities in the online video biz, execs said. However, there are no specific properties at this point AT&T and Chernin Group are seeking to acquire, according to a source familiar with the deal.
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”AT&T and The Chernin Group are combining our skill sets to address the growing consumer demand for accessing content how and when they want it,” John Stankey, AT&T’s chief strategy officer, said in announcing the pact. “Combining our expertise in network infrastructure, mobile, broadband and video with The Chernin Group’s management and expertise in content, distribution and monetization models in online video creates the opportunity for us to develop a compelling offering in the OTT space.”
Peter Chernin, chairman and CEO of Chernin Group, noted that his company has been focused on investing in online video. The deal with AT&T “only further underscores our strategic commitment in this area as operators, investors and programmers,” he said in a statement. “AT&T’s massive reach on those platforms across mobile and broadband and their commitment to the online video space make them the perfect fit for this venture with us.”
The new venture will combine Chernin Group’s content assets and expertise with AT&T’s network infrastructure and marketing power. AT&T has more than 110 million wireless subscribers and more than 16 million total broadband subscribers.
