AT&T adds 26K DirecTV subs in Q3 as focus shifts to 'lower content cost platform'

AT&T (NYSE: T) reported net U.S. subscriber growth in the third quarter of 26,000 for DirecTV, as the company shifted focus for video service sales to its new satellite TV acquisition.

The DirecTV gains compared to a huge customer loss of 144,000 in the second quarter and losses of 28,000 in the comparable 2014 period.

The DirecTV gains come amid video subscriber losses of 92,000 for the company's U-verse platform. 

Randall Stephenson, AT&T chairman and CEO, said the U-verse losses were "expected," with AT&T's focus "shifting to the lower content cost DirecTV platform." AT&T ended the third quarter -- its first with DirecTV integrated into its fold -- with 25.4 million video customers, the most in the pay-TV. 

Stephenson pointed to AT&T's recent carriage deal with Viacom for U-verse, in which the platform was able to secure content pricing equal to the much larger DirecTV towards the latter part of the deal. He said these are the kinds of "cost synergies" investors can expect as AT&T negotiates future carriage and retrans deals. 

"We believe we are on a path for the best content pricing going forward," he said. "Our integration efforts are ahead of target. The early results suggest [the DirecTV] deal will be everything we expected and more."

He said AT&T is on pace to "meet or beat" projections of $2.5 billion in cost savings through synergies wrought by the DirecTV deal.

Stephenson added that he expects DirecTV to pick up further momentum as AT&T's sales and installer employees complete their training as it relates to DirecTV. 

AT&T's third quarter financial performance excluded the first 24 days of July, during which the DirecTV deal had yet to close. With many analyst forecasts including projections that factored a full July for DirecTV in the AT&T fold, AT&T warned analysts Wednesday that revenue might fall below some expectations. 

AT&T's consolidated revenues for the third quarter totaled $39.1 billion, up nearly 19 percent versus the third quarter of 2014, largely due to the acquisition of DirecTV.

Meanwhile, Stephenson said AT&T is making significant network virtualization plans. He said that by 2020, 75 percent of the company's network will be controlled by cloud infrastructure and software defined networking (SDN).

For more:
visit this AT&T investor relations page

Special Report: From Comcast to AT&T to Dish: How pay-TV performed in Q3 2015

Related articles:
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DirecTV lost 133K subs in Q2; pushes pay-TV's total quarterly cord-cutting carnage past 500K
Huge Q2 pay-TV customer losses not a 'cord-cutting inflection,' Evercore says

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