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AT&T's WarnerMedia plans to launch new streaming service in late 2019

Updated 2:13 PM ET, Wed October 10, 2018

(CNN) - Four months after being acquired by AT&T, WarnerMedia is making plans for a streaming TV service that will be sold directly to consumers.

WarnerMedia, the division of AT&T that includes HBO, Turner and Warner Bros, announced the new venture on Wednesday.

It will launch in the fourth quarter of 2019, WarnerMedia CEO John Stankey said.

It has the potential to be a direct competitor to Netflix, Amazon Prime Video, and Disney's forthcoming streaming service.

The product will build on the success of HBO Now, which streams live and on-demand HBO programming through apps and smart TVs.

"Our service will start with HBO and the genre defining programming that viewers crave. On top of that we will package content from Turner and Warner Bros. with their deep brand connections that touch both diverse interests and mass audiences," Stankey said in an internal memo.

Details like pricing and the name of the new service will be announced later. But it clearly represents a big bet by WarnerMedia, which officially became part of AT&T back in June.

The streaming space is getting more and more crowded every day. There are dozens of niche TV services alongside giants like Netflix and Amazon Prime Video. All of these are, in industry parlance, "direct to consumer" offerings, cutting out traditional middlemen like cable companies.

The WarnerMedia service is sure to draw comparisons to Disney's plans for a direct to consumer streaming service. Disney's venture is expected to launch in late 2019 and is part of a strategic shift at the company.

Stankey said WarnerMedia will balance its existing deals with distributors with its standalone streaming aspirations. Those existing deals with cable and satellite operators supply the per-subscriber fees that are the foundation of the business.

That foundation isn't going away, but it is being eroded by changing consumer habits. Thus WarnerMedia believes it needs its own Netflix-like platform.

"While going direct-to-consumer gives us an additional opportunity to reach audiences that aren't part of a traditional subscription service, our wholesale relationships will continue to be an important distribution channel," Stankey said. "So, it will be a priority to work with our partners to deliver a compelling and competitive product that will complement our wholesale distribution, allowing us to reach the largest number of viewers."

CNN is a unit of Turner. But the new service will not include news programming at first. It will feature a wide variety of entertainment content, tapping into the Warner library of films like "Harry Potter."

Some of the Warner Bros.' television shows up for negotiation include "ER" and "The Big Bang Theory," which aired on NBC and the CBS, respectively. If WarnerMedia is successful in its bid for the streaming rights to these shows, that could give it a leg up against its competitors CBS All Access, Hulu and Netflix.

WarnerMedia will have to navigate a thicket of contracts with existing distributors like Comcast and Netflix. That's one of the reasons why the plan was announced on Wednesday -- Stankey said staffers will now be able to work "openly on important technology, branding, affiliate, licensing and marketing issues."


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