AT&T Sees Gains In Key Financial Metrics, But Could Face High Subscriber Losses

AT&T is focusing on steady cash flow -- earnings before interest, taxes, depreciation, and amortization -- and low retransmission fee cost increases, but the company could take a hit with a loss of some 300,000 to 350,000 subscribers.

Speaking at a Bank of America Merrill Lynch media conference, Senior Executive Vice President/Chief Financial Officer of AT&T John Stephens said: “We took some going dark on a couple of our providers, until rates got to a reasonable level.”

AT&T has had carriage disputes/blackouts across its pay TV service brands including DirecTV, DirecTV now, and U-Verse, due to a breakdown in negotiations.

In addition, it has raised consumer prices in some areas. The company said of one pay TV service package : “We took the pricing on our entry related, package one, so to speak, from $35 up to $60 on a full collection of content. You can understand why we do that. Both of those things are going to have an impact on our customer count.”



AT&T has also had carriage disputes resulting in brief blackouts with CBS and Nexstar Media Group. Another dispute could occur with Walt Disney, involving its brands including ABC and ESPN.

Two days ago, Walt Disney sent out a statement concerning issues with AT&T: “Our contract with AT&T for the ABC, ESPN, Disney, and Freeform networks is due to expire soon, so we have a responsibility to make our viewers aware of the potential loss of our programming.”

Subscriber losses were an estimate, Stephens said: “We don't know what that incremental impact is going to be, but it could be in the 300,000 to 350,000 range of incremental impact of both those carriage disputes and that change in gross adds coming in.”

Stephens said the focus is on cash flow -- maintaining low increases on retransmission fees -- resulted in AT&T achieving its goal. He stated that for the first six months, the company was "more than successful in achieving that goal in the sense that we grew at 4%.”

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