Sony to Buy AT&T’s Crunchyroll Service for More Than $1 Billion

Sony Corp. SNE 0.81% has agreed to buy streaming-video service Crunchyroll from AT&T Inc. T 2.11% for $1.175 billion, adding to the Japanese company’s extensive library of animated movies and TV shows.

The deal with Sony’s Funimation Global Group comes as AT&T focuses its attention on its own mainstream HBO Max video service, which launched in the U.S. in late May. Some details of Sony’s pending purchase were reported in October by Nikkei News.

Crunchyroll counts about 3 million on-demand video subscribers and 90 million registered users. AT&T said the cash transaction, which is subject to regulatory approvals, covers more than 500 Crunchyroll employees.

Crunchyroll is the latest asset that AT&T is cutting loose to trim the debt load it amassed through its five-year push into entertainment. The acquisitions of DirecTV in 2015 and Time Warner in 2018 left the telecom network operator with more than $180 billion of net debt, an amount it has whittled down in recent years.

AT&T last year struck a deal to sell its Puerto Rican cable and wireless business to Liberty Latin America Ltd. LILA -1.13% for nearly $2 billion. The recent sale of European broadcaster CME Group Ltd. netted the company another $1.1 billion in cash and took $575 million off its balance sheet.

The telecom company also has reached the late stages of an auction of much of its DirecTV satellite business, according to people familiar with the process.

AT&T is reviewing many other parts of its empire to sharpen its focus on the company’s core telecom and media units. Cellphone and internet service still accounts for more than half of the Dallas company’s revenue. Its WarnerMedia division, as Time Warner is now known, has struggled along with its show-business peers since the coronavirus pandemic has sapped advertising and box-office revenue.

WarnerMedia is pinning its hopes on HBO Max, a new streaming video service built to compete with the likes of Netflix, Amazon Prime Video and Disney+. HBO Max executives have touted the $15 monthly service’s breadth of content as a selling point and have said they plan to keep growing its library by licensing more movies and TV shows. The service also made waves last week when it said it would release its 2021 movie slate on HBO Max at the same time films premiere in theaters.

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and Joe Flint at joe.flint@wsj.com

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