• by Karlene Lukovitz  @KLmarketdaily, April 22, 2020

AT&T’s Xandr ad services business proved a bright spot amid a quarter in which the telecom giant lost $435 million, or 5 cents per share, due to hits from the coronavirus pandemic — including nearly $230 million in advertising losses. 

The company reported earnings of $4.61 billion, or 63 cents a share, in the first quarter—up 7 cents from the year-ago quarter. Total revenue declined 4.6% to $42.8 billion, missing analysts’ expectation of $44.2 billion.

AT&T pulled its annual forecast and said it had limited visibility for the remainder of 2020, but also said that it has enough free cash flow to pay dividends and make debt payments.

The company beat Wall Street expectations by adding 163,000 net new monthly phone subscribers — despite having to shut down many of its retail stores in the period. But it lost 897,000 pay-TV subscribers, mostly at sagging DirecTV, plus a smaller number at U-Verse--bringing its total pay-TV subscribers to 19.4 million. AT&T TV Now lost 138,000 subscribers, bringing its total to 788,000.

Total video pay TV revenue declined 7.2% to $10.5 billion.

The group took on another big collective subscriber quarterly loss -- down 897,000 to 19.4 million subscribers. AT&T TV Now, its digital pay TV video service, had a net loss of 138,000, now totaling 788,000 subscribers.

AT&T’s $600 million in revenue declines included a $228 million, or 12.9%, loss in total advertising revenue, to $1.5 billion, due mostly to the cancellation or postponement of major sporting events. 

The company also took losses in equipment sales and from the suspension of movie and show production at WarnerMedia.

WarnerMedia, which was most impacted by the pandemic’s $435-million jolt to EBITDA, saw total revenue decline by $1 billion versus the prior-year quarter, to $7.4 billion.

Advertising operating revenue at WarnerMedia dropped by $300 million or 23.5%, to $979 million, according to the company’s 8-K filing with the SEC for the quarter. 

Separately, accounting eliminations shown under ad revenue generated $413 million in losses, up from $350 million in losses in the year-ago quarter. 

However, communications segment revenue classified under advertising revenue rose $72 million or 17.3%, to $489 million. 

In addition, the Xandr unit saw operating revenue rise by $63 million, or 14.8%, to $489 million. 

According to Xandr, the gain was driven by its addressable and targeted TV ads business, as demand continued to grow in categories including political and CPG. 

Its new “pause ad” format, introduced at CES in January, contributed to that growth and have been showcased during the increased VOD viewing opportunities of the shelter-at-home period, the company reports. 

Xandr says it is also attracting new global advertisers and publishers for its connected TV (CTV) capabilities. 

In addition, as announced last month, Disney, WarnerMedia and AMC Networks are now using the Xandr Invest programmatic platform for linear TV advertising. 

As of this month, other buyers can access those networks’ linear inventories through their private marketplaces (PMPs) via Xandr Invest, meaning that the networks can offer buys that combine standard linear and advanced targeted audiences. 

The new solution is generating “strong interest” from agencies and holding companies, according to Robert Wheeler, Xandr’s head of global communications, who says that Xandr will release viewership data in coming days.