Finance

AT&T Loses 3K Video Subs in Q3

DirecTV adds 323K, but can’t offset U-verse losses 10/23/2016 11:38 AM Eastern

AT&T issued its third quarter results a little early, given its plan to purchase Time Warner in a $108.7 billion deal is likely to occupy most analysts’ calculator fingers for the near future, and offered some insight into why it’s so bent on adding content to the mix – it continues to bleed video customers.

 

AT&T lost about 3,000 video customers in the third quarter, generally a strong one as college students reconnect after being gone for the summer, with a loss of 326,000 U-verse TV customers outpacing a gain of 323,000 subscribers at DirecTV. What’s more, AT&T said about 70% of DirecTV gains came from U-verse subscribers transitioning to the satellite service.

 

It was the sixth consecutive quarter of overall video customer losses for the telecom company, which began shedding TV customers in the second quarter of 2015. Since that time, AT&T U-verse has lost nealry 1.5 million video subscribers.

 

AT&T has said it expects overall video subscribers to turn positive in the second half of this year, driven by increases in DirecTV’s NFL Sunday Ticket out-of-market football package. Given the third quarter losses, that means AT&T would have to add more than 100,000 total video customers in the fourth quarter.  

 

The telecom giant added about 156,000 U-verse IP broadband customers in the period, but that too was offset by a loss of 161,000 DSL customers, bringing its total broadband subscriber losses to 5,000 for the period.

 

AT&T said about 100,000 pending video customers had the ability to receive TV via their mobile devices at the end of the third quarter, but they were not included in subscriber figured because the service had not yet been activated in their homes.

 

On the wireless side, revenue dipped 0.7% to $18.2 billion as the phone company lost about 268,000 mainstream wireless subscribers, generally smartphone users. Including other devices like tablets, and the company added about 212,000 mainstream customers.

 

AT&T released results about three days early – it had originally planned to make them public on Tuesday, but the Time Warner deal accelerated that schedule.

 

AT&T says it expects the Time Warner acquisition to be completed by the end of the year and expects Time Warner chairman and CEO to stay  on with the company at least through a transitional period. The telco said it also would wok hard to keep top execs like Turner chairman and CEO John Martin, Warner Bros. chairman and CEO Kevin Tsujihara and HBO chairman and CEO Richard Plepler on board with the combined company.

 

Analysts were still trying to get their heads around the deal. Telsey Advisory Group media analyst Tom Eagan wrote in a research note Sunday morning that although there is an argument for vertical integration (Comcast-NBC Universal), paying an 11-times to 12-times forward looking cash flow multiple for Time Warner doesn’t reflect “tremendous industrial logic.”

 

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