AT&T’s vow to focus more on profitability, partly by cutting back on pricing promos, has led its streaming TV service DirecTV Now to lose 267,000 subscribers in the fourth quarter.
That loss is in stark relief with the modest yet positive 49,000 new DirecTV Now subscribers AT&T added in the third quarter. It also sets DirecTV Now back in its pursuit of leading virtual MVPD Sling TV, which has more than 2 million subscribers.
Coupled with the 391,000 traditional video subscribers (between DirecTV and U-verse) that AT&T lost in the fourth quarter, the company gave back more than 650,000 video subscribers. AT&T did not break out subscriber numbers for its WatchTV streaming service, only noting that it still has fewer than 500,000 subscribers.
The good news for AT&T is that the company says it no longer has any DirecTV Now subscribers on promotional pricing. The company framed that news along with its continued, dramatic traditional TV subscriber losses as part of a plan to place more emphasis on profitability.
For now, though, AT&T’s entertainment group is experiencing declines in revenue and EBITDA. For the quarter, the group’s operating revenues totaled $11.96 billion, down from $12.56 billion one year ago, and EBITDA totaled $2.15 billion, down from approximately $2.37 billion one year ago.
But AT&T’s WarnerMedia group, formed out of its recently completed Time Warner acquisition, had an upbeat quarter. The group’s quarterly revenue totaled $9.23 billion, up 5.9% year over year. The company attributed the growth to a 10.4% revenue increase at Warner Bros., while both Turner and HBO were down slightly. Operating income totaling $2.3 billion for the group was up 33.2% year over year. AT&T gave a lot of credit to strong Warner Bros. theatrical and television licensing revenue growth and said that Turner saw subscription revenue growth while HBO digital (including HBO Now) saw subscriber growth during the quarter.
Overall, AT&T’s consolidated revenue for the fourth quarter totaled $48 billion versus $41.7 billion in the year-ago quarter, up 15.2% primarily due to the Time Warner acquisition. Operating income was $6.2 billion versus $1.3 billion, primarily due to the Time Warner acquisition and the write-off of certain network assets in the prior year.