AT&T boss slams Roku, Amazon for enforcing deal made with AT&T

HBO Max, where the “Max” stands for “Maximum confusion.” (Image: WarnerMedia/AT&T/Handout, Graphic: The Desk)

AT&T’s chief executive officer has criticized streaming video platforms Roku and Amazon for choosing to enforce commercial agreements made with the telecom over the distribution of HBO programming several years ago.

The unusual comment was made at a newspaper conference this week in which chief executive John Stankey painted Roku and Amazon’s decision to enforce existing agreements as a “bottleneck.”

“We should ask ourselves, is that friction somebody reeling feeling their oats and maybe having market power above and beyond what’s reasonable for innovators?” Stankey, the chief executive of the largest pay television company in the United States, said at the Wall Street Journal’s Tech Live event.

Stankey’s issue stems from an agreement made with both streaming video platforms to sell and distribute HBO’s original and licensed content natively by way of the Roku Channel and Amazon Prime Video Channels respectively.

Under the agreement, Roku and Amazon agreed to distribute the channels in exchange for a commission of each subscription sold. HBO’s streaming product cost $15 a month.

Last year, AT&T announced it would soon replace its standalone streaming services HBO Go and HBO Now with a new streaming service called HBO Max. The new service incorporates more movies and TV shows from within AT&T’s vast Warner Bros. content library as well as acquired programming from third parties like the BBC and Comedy Central.

HBO Max launched earlier this year on Apple TV, Android TV, PlayStation and Microsoft XBox devices. Apple agreed to stop distributing HBO subscriptions through its Apple TV Plus app in order to offer the HBO Max app to its device users.

Since it launched, HBO Max has been unavailable to millions of Roku and Amazon Fire TV users because the companies that operate those platforms are demanding the right to distribute HBO Max subscriptions and content natively. Both companies have pointed to their existing agreement with AT&T over HBO content, according to people familiar with conversations between the companies.

At one point, AT&T extended an olive branch to Roku, offering to give Roku users who purchased HBO subscriptions through the Roku Channel access to HBO Max using login credentials — but only if Roku agreed to reduce the commission they took for each HBO subscription, according to a source. Roku declined the offer. Whether the same deal was made to Amazon for Fire TV users was not immediately clear.

Stankey’s insistence on Roku and Amazon tearing up their existing sales agreement for a completely new one — and his decision to withhold HBO Max from those platforms until they acquiesce — has been cited as a major reason why AT&T has struggled to sign up subscribers to the service since it launched in late May.

Before HBO Max launched, AT&T reported the subscription service had around 30 million paying subscribers through its cable and satellite partnerships as well as the online-only HBO Now app. That number inched up to 36.3 million subscribers at the end of July.

Less clear is how many of those 6.3 million subscribers purchased HBO Max directly from AT&T, received it for free with their AT&T service or simply signed up for HBO through their cable or satellite provider. But assuming all 6.3 million new subscribers paid directly for HBO Max, it still reflects AT&T’s struggle to attract customers compared to upstarts Disney Plus and Comcast’s Peacock. (Disney Plus currently has 60 million subscribers and is less than a year old; Peacock passed 10 million sign-ups in July.)

But everything’s going a-OK according to Stankey, who has repeatedly said in interviews that he couldn’t be more thrilled with how HBO Max is doing and reassuring investors that everything is going to plan.

“I’m incredibly happy with where we are,” Stankey said on Monday.

At least someone is.