AT&T Loses 199,000 Video Subs in Q2

Adds 152,000 DirecTV Now customers in quarter, extending OTT TV base to about 500,000 (Updated)
ATT 450x345.jpg

AT&T added 152,000 DirecTV Now subscribers in Q2, but that was not nearly enough to offset losses from DirecTV’s satellite TV business or AT&T’s managed IPTV service, U-verse TV.

AT&T said it lost 351,000 “traditional” video subs in Q2 due to “seasonality and elevated competition,” shedding 156,000 DirecTV satellite subs and 195,000 IPTV customers in the period.

With Q2 subs factored in, DirecTV Now had about 500,000 subs at the end of Q2.

RELATED: AT&T Kicks Off DirecTV Now Ad Campaign 

AT&T ended the quarter with 25.2 million video subs. About 85% of its “traditional” video base (DirecTV and U-verse TV) is now on AT&T’s satellite platform.

DirecTV Now’s 152,000 additions in Q2 2017 well surpassed a lackluster 72,000 adds in Q1 2017, but could not match the 267,000 DirecTV Now customers it added in Q4 2016 (DirecTV Now launched last November).

UPDATE: Speaking on today’s earnings call, AT&T CFO John Stephens said the “vast majority” of DirecTV Now subs are bundled with AT&T’s wireless services. He also confirmed that all reported DirecTV Now customers are paid subscribers.

Stephens was confident that DirecTV Now will continue to grow as it adds cloud DVR capabilities and other features that are being woven in based on feedback from customers. He was also confident that data insight that will help to drive advanced advertising opportunities will help to drive the OTT service to profitability. He said about half of DirecTV Now customers are people who had never had a pay TV service before.

AT&T had a net gain of 112,000 IP broadband subs in Q2 despite DSL losses of 104,000. AT&T added 8,000 total broadband subs in the period, noting that just 1 million DSL subs remain in AT&T’s broadband sub base.

AT&T said about 60% of its broadband subs get speeds of between 18 Mbps to 1 Gbps, and that the number of subs with speeds of 18 Mbps more has risen by 1.6 million in the past year.

The company said it now markets AT&T Fiber, its 1-Gig-capable FTTP platform, to more than 5.5 million customer locations in 55 markets.

AT&T also pointed to synergies it’s seeing from the merger with DirecTV, noting that wireless subs with TV were at 15.1 million at the time of the closing in July 2015, and were at 19.8 million at the end of Q2, up 31%. TV subs with wireless plans have also risen 18% to 6.4 million since the closing of the deal.

AdWorks, the company’s advanced ad division, saw revenues climb by nearly 15%.

AT&T said it expects its proposed acquisition of Time Warner to close by year-end.

AT&T turned in consolidated Q2 revenues of $39.8 billion, down from $40.5 billion a year earlier due to declines in its legacy wireline services and consumer mobility. Q2 net income was $3.9 billion, or 63 cents per share, up from $3.4 billion, or 55 cents per share.

AT&T’s Entertainment Group pulled in Q2 revenues of $12.7 billion, flat year-on-year but up sequentially. Total video revenues were up 2.1%, but broadband revenues dropped slightly.