AT&T said sales for the second quarter of 2020 were lower across all of its segments because of the coronavirus pandemic. That included a 22.9% plunge in WarnerMedia revenue, which the telco said was partly due to lower content and ad sales related to COVID-19.
WarnerMedia’s Q2 2020 operating revenue was $6.8 billion, down 22.9% year over year, with segment operating income contribution of $1.9 billion, down 18.4% versus the year-ago quarter. AT&T estimated COVID-19 was responsible for $1.5 billion in lower sales at WarnerMedia. Turner’s advertising revenue plummeted 37%, to $796 million in the most recent quarter.
Warner Bros. revenue for Q2 was $3.3 billion, down 3.9%, driven by “the absence of theatrical releases and lower games and other revenues.” That was partially offset by higher TV revenue, although that included internal sales to HBO Max (which are eliminated in the consolidated WarnerMedia results).
WarnerMedia is looking at resuming production starting next month, but newly installed AT&T CEO John Stankey told analysts on the earnings call that it will take some time before it resumes that to February 2020 levels. He said restarting production was “critical” to driving growth for HBO Max.
Revenue also declined in AT&T’s domestic video and legacy wireline services, and Latin America was impacted by foreign exchange pressure, the telco said.
The hemorrhaging of customers at DirecTV and AT&T’s other pay-TV services continued: The company reported 17.7 million premium TV subscribers as of the end of Q2 – a 886,000 net loss for the quarter. AT&T has lost 3.9 million premium TV subscribers in the last 12 months, shrinking by 18%.
Customers of the AT&T Now “skinny” bundle plunged 46% year-over-year, to stand at 720,000 at the end of June 2020.
AT&T said COVID-19-related issues cut into adjusted earnings by $830 million, while the investment in the recently launched HBO Max premium streaming service reduced EBITDA by about $400 million.
On the positive side, even with the revenue drops, AT&T beat Wall Street’s earnings forecasts. The company also touted the launch of HBO Max as “successful,” having contributed to growing the total HBO and HBO Max customer base by 1.7 million subscribers, or up 5%, since the end of 2019.
“We are aggressively working opportunities to sharpen our focus, transform our operations and continue investing in growth areas, with the customer at the center of everything we do,” newly installed AT&T CEO John Stankey said in prepared remarks.
AT&T’s consolidated revenues for the second quarter were $41.0 billion versus $45.0 billion in the year-ago quarter. The company posted adjusted earnings per share of 83 cents. Wall Street analyst consensus estimates for AT&T’s second quarter were for in $41.1 billion in revenue and adjusted EPS of 79 cents.