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Home / Business / AT&T loses another 1.3 million TV customers while DirecTV's free fall continues

AT&T loses another 1.3 million TV customers while DirecTV's free fall continues



  An AT&T logo seen on the outside of the building.
Enlarge / An AT&T store in Chicago.

AT&T lost more than 1.3 million TV customers in Q3 2019 as its nosedive in both the traditional pay-TV and online streaming markets continued.

AT&T today reported a net loss of 1

,163,000 premium TV customers, which includes DirecTV satellite and U-verse wireline TV services. This figure is slightly lower than the customer loss AT&T warned investors came last month. AT&T today also reported a net loss of 195,000 customers with AT&T TV Now, the online streaming video service formerly known as DirecTV Now.

The latest losses leave AT&T with 20.4 million satellite and wireline TV subscribers and 1.1 million streaming subscribers. AT&T has lost nearly 5 million satellite and cable TV customers since the end of 2016, when it had a total of 25.3 million subscribers in that category. AT&T has lost more than 700,000 streaming customers in the past year since hitting a peak of 1.86 million in Q3 2018.

AT & T's quarterly Video Entertainment revenue fell from $ 8.3 billion to $ 7.9 billion dollars year over year. AT&T has focused on increasing average revenue per customer, which rose 5.6% to $ 121.35 per month in the satellite and cable TV category. The total entertainment group – including TV, broadband and landline services – posted sales of $ 11.2 billion for the third quarter, down from $ 11.6 billion in the third quarter of 2018. However, the division posted operating income of $ 1.1 billion, only about $ 19 million less than the year before. third quarter.

AT&T attributed its premium TV customer losses to focus on profitability. "Customers rounding out promotional discounts, programming disputes and competition as well as lower gross additions due to the continued focus on adding higher value customers" all contributed to the net loss of 1,163,000 customers in that category, AT&T said.

AT&T said its loss of 195,000 online streaming customers was caused by "higher prices and less promotional activity" as AT&T wound up discounts it previously used to increase subscriber numbers. AT&T has raised TV prices several times despite claiming that the acquisition of Time Warner Inc. in 2018 of 2018 would allow it to lower TV prices.

AT & T's sales coverage company, including the mobile network, was $ 44.6 billion in the third quarter, down from $ 45.7 billion a year ago. Operating revenues rose from $ 7.3 billion to $ 7.9 billion. AT&T said so. "Revenue from revenues from legacy wireline services, WarnerMedia and domestic video, was partially offset by growth in strategic and managed business services, domestic wireless services and IP broadband."

AT&T promises no more major mergers

AT&T has been under pressure from activist investor group Elliott Management Corp., which has criticized AT & T's TV strategy and urged the company to consider divesting DirecTV.

AT&T today reached an agreement with Elliott that does not involve selling DirecTV. However, AT&T promised to conduct a "disciplined review" of the portfolio, saying it would make "no major acquisitions" over the next three years.

"We have evaluated the company's three-year plan and are supporting the steps toward a faster growing, more profitable, focused and shareholder-friendly company," Elliott said in a statement. Elliott said the agreement includes "significantly improved operational efficiency with meaningful margin expansion" and the appointment of two new directors.

AT&T said that CEO Randall Stephenson, who is nearing retirement, will continue in the top role throughout 2020. Following the expected CEO transition, the roles of CEO and chairman will be separated rather than held by the same person, Elliott.

As the Wall Street Journal noted, the plan also requires AT&T to use 50 percent to 70 percent of its free cash flow after dividends are repurchased. "Despite AT&T admitting, Elliott has" no restrictions on the ability to publicly criticize the company in the future, "the magazine wrote.

AT&T has $ 153.6 billion in long-term debt, mainly from the purchase of DirecTV and Time Warner. Over the next three years, AT&T said it would pay down all Time Warner debt and reduce its net debt-adjusted EBITDA ratio from today's level of 2.66X to somewhere between 2X and 2.25X.

AT&T is facing a class action lawsuit alleging it lied to investors to hide the error in its streaming TV service DirecTV Now, the lawsuit was recently updated to include allegations that AT&T supervisors encouraged sellers to create fake DirecTV Now accounts and signing AT&T customers on DirecTV Now "without the customer knowing it."


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