AT&T takes a pounding with 1MN pay-TV subs losses in Q1
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Editor
| 23 April 2020

As long ago as the beginning of April financial analysts had been warning the investor community to brace for impact with AT&T’s first quarter results for 2020 and the warnings have come to pass in the comms giant’s TV business line.

For the quarter ended 30 March 2020, AT&T's consolidated revenues for the first quarter totalled $42.8 billion, down $2 billion compared with the same time in 2019. Operating income rose 4% on an annual basis to $7.5 billion while first-quarter net income rose 12.1% compared with the quarter a year ago to $4.6 billion.

The company attributed the revenue fall to growth in domestic wireless service revenues and strategic and managed business services revenues that had been offset by declines in revenues from legacy wireline services, domestic wireless equipment, the Vrio business line and in particular WarnerMedia and domestic video. WarnerMedia revenues totalled $7.4 billion, reflecting said the company lower advertising due to March Madness cancellation along with comparisons to strong 1Q19 theatrical results.

For its Entertainment Group, AT&T said that it has seen solid video and broadband ARPU gains 209,000 AT&T Fibre net additions and IP broadband revenue growth of nearly 2%. Yet the company revealed that while it had a total of 19.36 million video customers — 18.6 million premium TV subscribers for its DirecTV satellite and U-verse TV services and 788,000 OTT customers — lines there had been 897,000 net losses in the quarter for premium services and 83,000 lost OTT video customers. Even though it looked like AT&T had stopped the rate of haemorrhaging of video customers, Q1 2020 losses were less than those in the fourth quarter of 2019, a year ago video losses totalled 627,000.

Assessing the finanical results for the quarter and future prospects, AT&T COO and president John Stankey recognised the problems that AT&T faced with a softer advertising market and a certain amount of economic activity that had been suppressed in the TV arena. HE also observed the production hiatus in the WarnerMedia line. Yet despite the heavy losses and challenges in other lines, Stankey expressed confidence for the future especially with the forthcoming HBO Max direct-to-consumer service which was set for launch on 27 May.

He said: “We're going to add to that a boost of adrenaline with the HBO Max promotion…we're going to start to get pretty loud in the market with that. So the combination of growing the HBO Max subscription base, plus it's tied to promotion with a lot of our wireless products and services, I think, is going to drive up awareness. And there's some great opportunities that pair tablets and devices together and see great entertainment with it and get good values on that, that will be helpful. Our 5G deployment…we're going to be out in the summer where we have nationwide coverage, and that will further improve and also allow for a marketing position that I think will be helpful.”

It noted the 27 May launch of HBO Max from which it hoped to success in the direct-to-consumer arena.