After losing another 1.16 million users across its DirecTV and U-verse platforms in the third quarter, AT&T is telling investors the worst of the cord cutting is over.
“We expect that our premium video losses have peaked,” AT&T CFO John Stephens told investment analysts during the company’s third-quarter earnings call Monday.
“We had about 225,000 net losses due to programming blackouts,” Stephens added. “Our gross adds were down about 400,000 due to new, higher intro pricing and credit thresholds, as well as more targeted promotions, and we continue to work through customers rolling off two-year price locks. Those video losses also impacted our broadband numbers, especially our bundled customers.”
For DirecTV, it was the ninth consecutive quarter of subscriber losses. The platform had just over 21 million users in the first quarter of 2017, during which it broke even in terms of customer growth. At the end of the second quarter, it had just over 17.9 million customers left.
AT&T didn’t break out its premium pay TV losses, but the bulk of the 1.16 million defections in the first quarter undoubtedly belonged to DirecTV. U-verse has held somewhat steady in recent quarters at around 3.7 million customers.
With DirecTV in free-fall, AT&T has faced investor pressure to divest the satellite TV platform, for which it paid $67 billion for in 2015.
For his part, AT&T CEO Randall Stephenson explained to investors that AT&T isn’t necessarily filled with regret about the purchase.
“Gaining scale in linear pay TV was the core rationale behind our DirecTV acquisition,” Stephenson said. “We realized the satellite business was mature, and we anticipated subscriber losses.
“However, the content savings quickly turned our U-verse pay TV business from loss to a profit. And since we bought DirecTV, it has generated healthy cash flows of over $4 billion per year or a total of $22 billion in cash by the end of this year.