×
You will be redirected back to your article in seconds

AT&T Loses Record 385,000 Traditional Pay-TV Subscribers in Q3, Posts Gains for DirecTV Now

AT&T’s DirecTV and U-verse TV businesses were hammered in the third quarter of 2017, while the telco’s over-the-top DirecTV Now service delivered its biggest quarterly increase since launching less than a year ago.

The company reported a record quarterly loss of 385,000 traditional pay-TV subs, which AT&T blamed on increased competition from other pay-TV operators and over-the-top services, as well as implementing stricter credit standards and “hurricane disruptions.” That was partially offset by 296,000 net adds for the DirecTV Now service.

Overall, AT&T saw a net loss of 89,000 video subscribers in the period. At Sept. 30, 2017, AT&T had 25.08 million video subscribers in the U.S., including 787,000 for DirecTV Now. That’s down from 25.92 million a year earlier.

For the fourth quarter, AT&T expects to report a net addition of traditional TV subscribers, CFO John Stephens told investors on the company’s earnings call Tuesday — after a net loss of 969,000 in the first nine months of 2017. Stephens called out AT&T’s bundling strategy with DirecTV, saying wireless-and-TV bundle subscribers have grown 20% since the close of the DirecTV deal, with 6.5 million video customers currently also taking a wireless service. “We only have about a quarter of the video base in these bundles, so we see considerable opportunity in our future,” he said.

AT&T has launched a beta trial for its next-generation TV software platform — expected to launch widely in early 2018 — which will include features like cloud DVR, according to Stephens. He didn’t provide additional details. Variety reported Tuesday that DirecTV is gearing up to introduce an Android TV-based set-top box, described as the “new AT&T/DirecTV Wireless 4K OTT Client,” that will deliver programming via the internet rather than satellite.

Stephens also touted the growth of DirecTV Now, noting it has live local TV channels in more than 75 markets, and said customer acquisition costs for the OTT service are just a fraction of legacy pay-TV services. “We are confident in the direction we are heading,” he said.

Half of DirecTV Now’s customers have come from traditional pay-TV rivals, with 10% from DirecTV or U-verse and the rest representing “cord-nevers,” who have not previously had pay television, Stephens said on the call.

Earlier this month, AT&T warned investors that it was projecting its traditional pay-TV services would shed 390,000 customers in the quarter, with a gain of about 300,000 DirecTV Now OTT subscribers.

Meanwhile, AT&T’s proposed $85 billion takeover of Time Warner remains pending. The companies on Monday said they extended the termination date of the deal “for a short period of time” as they await approval by the U.S. Department of Justice. AT&T says it remains poised to close the Time Warner acquisition by the end of 2017.

“We look forward to closing our acquisition of Time Warner and bringing together premium content with world-class distribution to deliver a better entertainment experience for consumers and more effective targeted advertising,” AT&T chairman and CEO Randall Stephenson said in announcing earnings.

Overall, AT&T reported Q3 revenue of $39.67 billion and earnings per share of 74 cents. Wall Street had expected EPS of 74 cents on revenue of $40.12 billion.

AT&T’s Q3 revenue in the consumer wireless segment was $7.7 billion, down 6.3% year over year. That was due to fewer phone sales and upgrades, as well as a $419 million decline in postpaid service revenue due to AT&T shifting customers to its business segment. It reported 3 million total wireless net adds, including 2.3 million in the U.S.

Revenue in the telco’s entertainment group, which includes DirecTV, broadband and wireline voice, was $12.65 billion, down 0.6%, largely driven by a 19% year-over-year drop in revenue from legacy voice and data services. Video entertainment revenue for Q3 was $9.2 billion, up 1.9%.

More Biz

  • Alan Horn Bill Tanner

    Alan Horn to Keynote Variety Business Managers Elite Breakfast, Bill Tanner to Be Honored

    Bill Tanner will be recognized with Variety’s 2019 Business Managers Elite Award at the annual Business Managers Elite Breakfast presented by City National Bank, which takes place in Beverly Hills on Nov. 13. Co-chairman and chief creative officer of The Walt Disney Studios Alan Horn will be the keynote speaker in conversation with Variety editor-in-chief, [...]

  • Smoke haze covers the Sydney Harbour

    Australia's Seven West to Merge With Affiliate Prime Media

    Australia’s Seven West Media has agreed a deal to acquire regional broadcast group Prime Media. The move is a further step in the consolidation of Australia’s traditional media industry. The two companies announced on Friday that Seven will make the acquisition entirely through the issue of new shares to the owners of Prime. Both companies [...]

  • Ron Meyer

    Ron Meyer Files $10 Million Suit Over Forged Rothko

    NBCUniversal Vice Chairman Ron Meyer has filed a $10 million suit against two art dealers, claiming they sold him a forged Mark Rothko painting in 2001. Meyer accuses Susan Seidel and Jaime Frankfort of duping him into buying the work. According to the suit, he was told that it would be included in an official [...]

  • Former movie producer Harvey Weinstein (L)

    Harvey Weinstein Seeks to Call Expert on 'Recovered' Memories at Rape Trial

    Harvey Weinstein’s attorneys are seeking to call an expert on “recovered memories” at his trial on rape and sexual assault charges. The defense has filed a motion asking to call Deborah Davis, a psychologist and professor at the University of Nevada at Reno. Davis is a frequent defense witness. She co-authored an article in 2006 [...]

  • Tekashi 6ix9ine Docuseries Coming From Showtime

    Tekashi 6ix9ine Docuseries Coming From Showtime and Rolling Stone

    Showtime Documentary Films today announced a new limited docuseries profiling controversial rapper Tekashi 6ix9ine. Titled “SuperVillain” and inspired by the Rolling Stone feature written by Stephen Witt, the three-part series will trace how a New York City deli clerk named Daniel Hernandez became superstar rapper Tekashi 6ix9ine — who racked up 2.6 billion streams and [...]

  • Fader Label Logo

    Fader Label Signs Two New Acts, Boosts Staff

    The Fader Label, home to Clairo, Matt and Kim and others, announced two new signings today along with three new hires on its staff. Charlie Burg and Zachary Knowles have joined the label’s talent roster, while Carson Oberg has come aboard as general manager, Yasmine Panah as project manager and Josh Hymowitz as label coordinator. They [...]

More From Our Brands

Access exclusive content