AT&T Partners With Chernin Group For Netflix-Style Service

AT&T T said it would join forces with the Chernin Group in a $500 million joint venture to create and launch a Netflix NFLX-style video streaming service. According to Gigaom this marked the first potential launch of an OTT TV service by a large U.S. ISP.

AT&T is the nation’s second largest broadband provider, second only to Comcast CMCSA. Details are sketchy, but the assets Chernin would bring to the venture include a majority stake in subscription video on demand service, Crunchyroll.

Variety reported that the stated goal of the venture would be to invest in both ad-supported and subscription-based VOD channels. Also included would be an unnamed number of streaming services.

Related: AT&T Threatening To Boycott Wireless Spectrum Auction

The partnership would allow the two companies and the resulting larger cash reserves the opportunity to seek out acquisitions in online video. At this point, however, according to a Variety source, no specific entities had been targeted.

In a statement, John Stankey, Chief Strategy Officer at AT&T said, ”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."

"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.”

According to The Chernin Group CEO, Peter Chernin, “A critical part of The Chernin Group’s strategy has been our significant focus on the online video industry, and joining forces with AT&T only further underscores our strategic commitment in this area as operators, investors, and programmers.”

The move by AT&T and Chernin comes after announcements by Verizon Communications VZ, Disney DIS, and Dish DISH regarding plans to launch video products outside the traditional TV subscription base.

Verizon made its move in January with the acquisition of a streaming service Intel created but did not launch. Dish recently inked a deal with Disney to carry some of Disney-owned cable channels like ESPN as part of an Internet bundle.

It was expected that the AT&T/Chernin venture would follow the same route as companies like Netflix and seek licensing deals as opposed to trying a run-around a la Aereo, which is currently facing a challenge to its business model in the Supreme Court.

At the time of this writing, Jim Probasco had no position in any mentioned securities.

Posted In: NewsEventsMediaAereoAT&TComcastdishdisneyESPNIntelNetflixverizon communications
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