AT&T shares slump as satellite, streaming TV customers leave
NEW YORK (AP) — Wireless and entertainment giant AT&T Inc. on Wednesday reported big subscriber declines in its TV division — even in its much-lauded DirecTV Now streaming service.
AT&T has spent billions in recent years to enter the entertainment business, buying satellite TV company DirecTV and then Time Warner, owner of HBO, CNN and the Warner Bros. movie studio.
Its video division is taking some lumps, however. In the fourth quarter, it added to its string of satellite-TV customer losses with 403,000 defections, worse than Wall Street analysts expected. DirecTV Now, the online service pitched as a cable replacement, shed 267,000 customers, the first drop since it launched in November 2016.
AT&T has been rolling back big discounts for DirecTV Now. It had 500,000 customers paying only $10 a month for the service, which hurts its profitability. Many of those customers are leaving as promotions end. In a more positive sign, the number of customers paying full price for the service grew, AT&T CEO Randall Stephenson said on a call with analysts Wednesday. DirecTV Now starts at $40 a month. It has 1.6 million streaming customers.
In its wireless division, the second-largest in the country after Verizon, AT&T added 134,000 cellphone customers who pay a monthly bill. Those are more lucrative than “prepaid” cellphone customers. But analysts expected more, and “churn,” or the percentage of customers who leave, rose.
Its WarnerMedia division, home to its TV networks and movie studio, got a boost from the box office of films including “A Star is Born” and “Aquaman.”
Shares of the Dallas company slumped 5 percent to $29.17 in late morning trading Wednesday.
Overall, the company posted net income of $4.86 billion, or 66 cents per share. Earnings, adjusted for one-time gains and costs, were 86 cents per share. The average estimate of 17 analysts surveyed by Zacks Investment Research was for earnings of 85 cents per share.
The telecommunications company posted revenue of $47.99 billion in the period, which fell short of Wall Street forecasts of $48.43 billion.
For the year, the company reported profit of $19.37 billion, or $2.85 per share, on revenue of $170.76 billion.