A week after MoffettNathanson analyst Craig Moffett predicted that AT&T would report around 146,000 satellite TV customer losses in the fourth quarter for its DirecTV linear platform, peer Jeff Fan at Scotiabank suggested the attrition will be even worse than that.
Fan predicts that when it reports fourth-quarter earnings Wednesday, AT&T will reveal satellite TV losses of around 250,000 for DirecTV.
Fan also predicts growth of the DirecTV Now virtual MVPD platform will more than offset the linear service’s losses.
“However, we believe that DirecTV Now subscribers have substantially weaker economics than linear TV and, as a result, we expect [AT&T’s] Entertainment segment to offset gains in broadband and experience…”
In justifying his firm’s decision not to upgrade AT&T’s stock from neutral following a major rollback in corporate taxes, Moffett cited fierce U.S. competition from Verizon and T-Mobile on the wireless side and equally challenged economics in wireline.
“Secular headwinds for the satellite TV business, which represents the majority of the [wireline] segment, are worsening rapidly,” he said.
AT&T lost 452,000 DirecTV satellite users in the first nine months of 2017.