AT&T wants in on online video -- and promises $500M in funding

AT&T wants to get into show business.

The company said on Tuesday that it was partnering with media holding company The Chernin Group to create a joint venture that would acquire, invest in, and launch online video services. The two companies have committed $500 million in funding for the venture.

It's the latest move by AT&T to diversify its revenue beyond its core phone business. With so-called over-the-top video services such as Netflix posting surging profits, AT&T wants to get in on the action as well. The company has been looking to expand the kinds of services it can deliver either through its wireless or wired network as it looks to avoid the fate of becoming a "dumb pipe" that can only make money off of connection fees.

AT&T is tapping the expertise of The Chernin Group, led by entertainment industry veteran Peter Chernin, formerly of News Corp. and once considered one of the most powerful individuals in the business because of his stints at 20th Century Fox and the Fox Broadcasting Company. The Chernin Group boasts investments in media properties such as anime-streaming service Crunchyroll, music streaming service Pandora, and mobile news reader Flipboard.

The joint venture includes contribution of The Cherin Group's majority stake in Crunchyroll.

AT&T Chief Strategy Officer John Stankey touted the combination of AT&T's expertise in network infrastructure, mobile, broadband, and video work with The Chernin Group's management and distribution experience in talking up the venture.

The carriers have often complained about the money that over-the-top players make delivering video and services through the networks they build. AT&T is hoping it gets a fair slice of that pie.

AT&T shares slipped 0.2 percent, or 7 cents, to $35.99 in pre-market trading on Tuesday.