AT&T's DirecTV Records Big Video Losses

AT&T’s DirecTV unit had a rough fourth-quarter 2018 period posting big -- and unexpected -- video subscriber declines in both its satellite and virtual subscription video-on-demand businesses.

The company’s satellite pay TV business lost 403,000 subscribers, steepening its loss against a decline of 147,000 subscribers in the fourth quarter of 2017. 

That’s a 6.1% decline, which continues an accelerating drop for DirecTV from previous periods -- down 5.2% (third-quarter 2018); losing 4% (second-quarter 2018); and a 3.3% fall (first-quarter 2018).

DirecTVNow, its online provider of live, linear TV networks, showed a massive reversal -- a loss of 267,000 subscriber in the quarter versus a 368,000 gain in the year-ago period.

Michael Nathanson, senior media analyst at MoffettNathanson Research, wrote in a note: “To be fair, AT&T had guided to subscriber losses in fourth quarter. But nobody expected this. Consensus called for a loss of 19,000. Instead, they lost 267,000.”



At the end of the year, DirecTV had 19.2 million subscribers and DirecTV had 1.6 million. AT&T’s older fiber-based U-Verse witnessed a slight gain, up 1.4% to 3.68 million.

Things aren’t much better with its entertainment networks.  

Revenue at Turner, its group of TV networks under its WarnerMedia umbrella, was weak -- down 0.6% to $3.21 billion -- while HBO slipped 0.4% to $1.7 billion. Both Turner and HBO witnessed viewer declines, the latter due to an ongoing carriage dispute with Dish Network.

In terms of company-wide advertising revenue, AT&T’s Turner revenues posted $1.15 billion, while Xander, the company’s new advanced advertising unit, was at $566 million, including its AppNexus acquisition, which was completed last year. It produced $543 million from AT&T’s communications group, which includes wireless, wireline telecom, video and broadband services.

Overall, Nathanson says, “advertising trends remain weak.”

For the year, AT&T total advertising revenue was $4.4 billion up from $1.6 billion -- largely due to AT&T’s closing of its Time Warner purchase, completed in June 2018.

One bright spot for AT&T in entertainment is the Warner Bros studio, which was up 10.4% in revenue to $4.48 billion. Strong theatrical results were obtained from big hits “Aquaman” and “A Star is Born.”

Mid-day trading of AT&T’s stock was down 4.2% to $29.40.

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