AT&T lost 1.4 million pay TV customers in its third quarter, a customer bloodletting that the company blamed on rising prices and programming blackouts.
The Dallas-based company lost around 1.16 million premium TV subscribers, while AT&T Now saw 195,000 subscribers leave the service. It’s likely that the corporate feuding that caused CBS to go dark on DirecTV and AT&T U-Verse earlier in the year contributed to the company’s pay TV losses.
Though AT&T CEO Randall Stephens told investors its pay TV numbers would improve in Q4, it’s been a particularly rough year for the company’s television arm: The company saw a 778,000 net loss in DirecTV satellite and U-verse customers during its second quarter, while AT&T’s DirecTV Now service lost 168,000 subscribers.
Outside pay TV losses, AT&T’s third quarter report was mixed, beating Wall Street expectations but missing revenue expectations. The company’s revenue was down 2.5 percent.
Although AT&T’s Time Warner acquisition, which was completed in June 2018, has caused plenty of structural changes throughout AT&T, the company told investors that Stephens would not be stepping down in 2020. AT&T also pledged to not make any similarly large acquisitions —the company acquired DirecTV in a $67 billion deal in 2014 — through at least 2022.The company said it will sell $5 to $10 billion in non-strategic assets to help pay off its massive debt load, which stands at around $170 billion.
AT&T’s move to lighten is debt load comes from pressure from Elliott Management, a $3.2 billion stakeholder in the company that has urged the company to reign in its expansion. AT&T recently sold its assets in Puerto Rico and Latin America to help lower its debt.
As for WarnerMedia, revenue dropped 4.4 percent in the third quarter, though the company enjoyed a particularly strong box office performance earlier in the year. It’s possible that WarnerMedia could see a fourth quarter uptick from “Joker,” which continues to smash box office records.
The company’s shrinking pay TV numbers came a day before WarnerMedia is set to unveil HBO Max, a streaming service that AT&T is positioning to become a major force in the streaming market. HBO Max is expected to launch in Spring 2020 and WarnerMedia will share additional details – which could include pricing and a firm release date – about the streaming service during an event in Burbank tomorrow.
Though HBO Max will give AT&T a foothold in the streaming television game, it will have plenty of competition. Apple and Disney are set to launch their own streaming services in November, and Apple TV+ and Disney+ will have had several months to gain traction by the time HBO Max hits the market. HBO Max will also launch around roughly the same time as Peacock, NBCUniversal’s own upcoming streaming service.