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AT&T loses another 1.3 million TV customers as DirecTV freefall continues, Ars Technica

AT&T loses another 1.3 million TV customers as DirecTV freefall continues, Ars Technica

      AT&T TV nosedive –


AT&T tries to make peace with investors after losing 5M subscribers since 2016.





An AT&T logo seen on the outside of a 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 reporteda net loss of 1, 163, 000 customers in the premium TV category, which includes DirecTV satellite and U-verse wireline TV services. That number is slightly worse than the customer loss that AT&Twarned investors was coming last month. AT&T today also reported a net loss of 195, 000 customers of AT&T TV Now, the online streaming video serviceformerly known as DirecTV Now.

The latest losses leave AT&T with20 .4 million satellite-and-wireline TV subscribersand 1.1 million streaming subscribers. AT&T has lost nearly 5 million satellite-and-wireline TV customers since the end of 2016, when it had atotal of 25 .3 million subscribersin that category. AT&T has lost more than 700, 000 streaming customers over 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 year over year. AT&T has focused on increasing the average revenue per customer,which rose 5.6%to $ 121. 35 per month in the satellite-and-wireline TV category. The overall Entertainment Group — including TV, broadband, and landline phone services — had Q3 revenue of $ 11. 2 billion, down from $ 11 .6 billion in Q3 2018. But the division turned an operating profit of $ 1.1 billion, only about $ 19 million less than the previous year third quarter.

AT&T attributed its premium-TV customer losses to a focus on profitability. “Customers rolling off promotional discounts, programmer disputes and competition as well as lower gross adds 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 195, 000 – customer loss in online streaming was caused by “higher prices and less promotional activity,” as AT&T phased out discounts that it previously used to boost subscriber numbers. AT&T hasraised TV pricesseveral times despiteclaimingthat its 2018 acquisition of Time Warner Inc. would allow it to lower TV prices.

AT & T’s company-wide revenue, including its mobile network, was $ 44 .6 billion in Q3, down from $ 45 .7 billion a year ago. Operating income rose from $ 7.3 billion to $ 7.9 billion. “Declines in revenues from legacy wireline services, WarnerMedia and domestic video, were partially offset by growth in strategic and managed business services, domestic wireless services and IP broadband,” AT&T said.

AT&T promises no more big mergers

AT&T has beenunder pressurefrom activist investor group Elliott Management Corp., which has criticized AT & T’s TV strategy andurgedthe company to consider divesting DirecTV.

AT&T today reached a deal with Elliott that does not involve selling DirecTV. However, AT&T promised to conduct a “disciplined review” of its portfolio and said it will make “no major acquisitions“over the next three years.

“We have closely evaluated the company’s three-year plan and support the steps toward a faster-growing, more profitable, focused and shareholder-friendly company, “Elliott said in anannouncement. Elliott said the deal includes “significantly enhanced 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 through all of 2020. After the expected CEO transition, the roles of CEO and chairman will be separated instead of being held by the same person, Elliott said.

As The Wall Street Journalnoted, the plan also “calls for AT&T to spend 50 percent to 70 percent of its free cash flow after dividend payments on share buybacks. ” Despite AT&T making concessions, Elliott “has no restrictions on its ability to publicly criticize the company in the future,” the Journal wrote.

AT&T has$ 6 billionin long-term debt, largely from its purchases of DirecTV and Time Warner. Over the next three years, AT&T said it will pay off all of the Time Warner debt and reduce its net debt-to-adjusted (EBITDA) ratio from its current level of 2. 66 X to somewhere between 2X and 2. 25 X.

AT&T isfacing a class-action lawsuitalleging that it lied to investors in order to hide the failure of its DirecTV Now streaming TV service. Thelawsuit was recently updatedto include allegations that AT&T supervisors encouraged sales reps to create fake DirecTV Now accounts and sign AT&T customers up for DirecTV Now “without the customer knowing.”



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