AT&T loses subscribers as media unit hit by COVID-19 pandemic

AT&T

AT&T have said that they lost monthly telecoms subscribers and suffered a $2.8 billion revenue decline due to the ongoing delay in feature film releases and advertising shortfalls in the second quarter COVID-19 pandemic damaged its business.

KEY POINTS:

  • AT&T report that they have lost telecoms subscribers and seen revenue decline by $2.8 billion in the second quarter
  • The company has 36 million subscribers for both its premium TV channel HBO and the new streaming service HBO Max
  • Delays in movie releases and a slump in advertising have also hit the company
  • AT&T is currently attempting to transform itself into a streaming and telecoms conglomerate 

AT&T, which has invested heavily to transform itself into a media and telecommunications conglomerate, reported 36 million subscribers for both its premium TV channel HBO and the new streaming service HBO Max, which launched in May. In the first quarter, HBO had about 33 million customers.

As the pandemic led to widespread stay-at-home orders to curb the spread of the virus and upended the economy, it has particularly hurt AT&T’s media business due to the loss of live sports broadcasts and delayed productions.

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“I don’t expect we’re going to see much change in the third quarter around those challenges that are in front of us,” AT&T’s CEO John Stankey said during an earnings call with analysts.

Revenue for the WarnerMedia segment, which includes HBO, fell 22.7% to $6.8 billion. It has continually postponed the release of Christopher Nolan’s highly anticipated movie “Tenet” as theatre chains remained largely shut both in the United States and across Europe.

The pandemic had a $1.5 billion impact on WarnerMedia revenue, AT&T said during the call with analysts.

In the second quarter, AT&T lost 151,000 mobile phone subscribers who pay a monthly bill, which included the loss of 338,000 customers who stopped paying their bills, but were kept on the network as part of a federal program to ensure Americans remain connected on their cell phones during the pandemic.

Analysts had expected the company to add 6,800 subscribers, according to research firm FactSet.

AT&T said it had started to see foot traffic return as retail stores begin to reopen with the loosening of lockdown restrictions, and that new phone launches later this year could help improve retail sales.

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The company lost 886,000 so called “premium TV” subscribers, which includes satellite TV provider DirecTV and a smaller number of U-Verse customers, as viewers switch to cheaper online video services.

Excluding items, AT&T earned 83 cents per share, above analysts’ estimates of 79 cents per share.

Total quarterly revenue fell nearly 9% to $41 billion. Analysts on average had expected $41.10 billion, according to IBES data from Refinitiv.

Initial reporting via our content partners at Thomson Reuters. Reporting by Neha Malara and Sheila Dang. Editing by Bernadette Baum.

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