×
You will be redirected back to your article in seconds

AT&T Drops 233,000 TV Subscribers as DirecTV Satellite Customers Remain Flat in Q1

Telco spent $41 million related to Time Warner merger in first quarter

DirecTV’s U.S. customer base remained unchanged in the first quarter of 2017, while AT&T’s U-verse TV service continued to shrink — dropping 233,000 subs in the period.

DirecTV had 21.012 million domestic subs as of the end of March, flat sequentially, compared with 328,000 net adds in the year-earlier period. U-verse TV stood at 4.02 million subscribers, down 23% year over year. According to AT&T, the growth of the DirecTV Now over-the-top pay TV package, launched last fall, helped to offset the declines on the traditional pay-TV side (but it didn’t disclose how many DirecTV Now customers it gained in Q1).

AT&T CFO John Stephens, on a call Tuesday with analysts, cited competition from cable rivals and other OTT services for the ongoing pay-TV slide and said DirecTV was particularly hurt in areas where AT&T doesn’t offer broadband. He said the telco is taking steps to address the segment including looking to increasingly bundle satellite TV with wireless, and added that it will be “more aggressive” in marketing DirecTV Now in the second half of 2017.

The DirecTV Now OTT product is cannibalizing DirecTV’s satellite business to some extent, “but it’s fairly nominal,” CEO Randall Stephenson said on the call.

AT&T also disclosed that it spent $41 million on costs related to its pending $85 billion acquisition of Time Warner, which has yet to receive approval from the U.S. Department of Justice. During Q4, AT&T said it spent $47 million related to the Time Warner deal. Stephenson told analysts AT&T continues to expect the Time Warner deal to close by the end of 2017, citing progress including the European Union’s recent OK of the deal.

Overall revenue for the first quarter totaled $39.37 billion, short of analyst estimates of $40.57 billion, with the telco blaming record-low equipment sales in wireless. The company posted earnings per share of 74 cents, in line with Wall Street forecasts.

In the critical wireless segment, AT&T lost 191,000 postpaid phone subscribers, compared with analysts projections of a drop of 245,000, as competition in the quarter ratcheted up with service providers fighting for share with new unlimited-data plans. It was the first time AT&T has lost wireless customers. Stephens called out AT&T’s bundling of HBO for no extra cost with the Unlimited Plus wireless plan as helping cut subscriber churn.

Verizon last week reported a net drop of 289,000 postpaid wireless subscribers for Q1 — also the carrier’s first-ever loss in the segment — while T-Mobile gained 914,000 postpaid customers in the period, beating Wall Street expectations.

Earlier Tuesday AT&T announced plans to roll out pre-standard 5G wireless networks in over 20 major metro areas by the end of 2017, starting in Austin, Texas, this week. The 5G networks provide twice the speeds of 4G LTE, according to the telco, and gives AT&T a credible replacement service for cable broadband, Stephenson said. It’s worth noting that Comcast is gearing up to launch a Verizon-powered mobile service this year, sold as a bundle with other Xfinity services.

Popular on Variety

More Digital

  • Paradiso

    New Podcast Studio Paradiso Launches With Series for Spotify, Sybel (EXCLUSIVE)

    Former executives from Canal Plus, entertainment company Konbini and advertising film Havas have joined forces to launch Paradiso, an international podcast production studio dedicated to delivering premium scripted, documentary and kids’ content for global platforms. The company has already scored commissions from Spotify and Sybel. Paradiso’s founding partners are Lorenzo Benedetti, the founder of Studio [...]

  • Brad Pitt stars in “Ad Astra”.

    ‘Ad Astra’ Once Again Tops Studios’ TV Ad Spending

    In this week’s edition of the Variety Movie Commercial Tracker, powered by the always-on TV ad measurement and attribution company iSpot.tv, Twentieth Century Fox claims the top spot in spending for the third week in a row with “Ad Astra.” Ads placed for the sci-fi film had an estimated media value of $6.47 million through [...]

  • Andrew MorseVariety's Entertainment & Techonology Summit,

    Listen: CNN Digital Chief Says Trump Doesn't Drive Traffic Success

    No subject might get as much attention across CNN’s digital properties as Donald Trump, but that doesn’t mean the news network is dependent on him for web traffic. Andrew Morse, executive VP and general manager of the AT&T-owned company’s digital operations, pointed to recent coverage of natural disasters and international incidents as more potent audience [...]

  • Jonah Hill attends the press conference

    Instagram Debuts Jonah Hill’s ‘Un-filtered’ Bullying Docu-Series (EXCLUSIVE)

    Facebook’s Instagram, as part of its anti-bullying initiatives, funded a new series directed by Jonah Hill featuring teens and young adults talking about their experiences with bullying. The four-episode “Un-filtered” goes live Wednesday (Sept. 18) on Instagram’s IGTV channel on its mobile app and the web. In the unscripted series, Hill interviews people aged 13-25 [...]

  • Plex

    Plex Signs Up Lionsgate for Upcoming Ad-Supported Video Service

    Media center app maker Plex has struck a deal with Lionsgate to add some of the studio’s movies and TV shows to its upcoming ad-supported video service. The news comes just weeks after Plex announced a similar deal with Warner Bros. “Lionsgate is one of the biggest names in the business and we know our [...]

  • Comcast Xfinity Flex

    Comcast Drops $5 Monthly Fee for Xfinity Flex Video-Streaming Set-Top for Broadband Customers

    Comcast will hand out one free set-top box for broadband subscribers to access Xfinity Flex, its video-streaming product for internet-only customers, as it looks to punch up the value of its high-speed internet business. Brian Roberts, Comcast’s chairman and CEO, announced the new strategy at Goldman Sachs’ Communacopia conference Wednesday in New York. “One of [...]

More From Our Brands

Access exclusive content