DirecTV settles for mixed bag of impacts due to COVID-19

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DirecTV will continue to be smaller part of AT&T’s video strategy. (DirecTV)

DirecTV, AT&T’s struggling satellite TV service, has seen some good and some bad impacts due to the ongoing coronavirus pandemic.

Jeff McElfresh, CEO of AT&T Communications, was asked during a Bank of America Merrill Lynch investor conference about how the lockdowns related to COVID-19 have affected DirecTV. Analyst Dave Barden seemed to suggest that DirecTV could be negatively impacted by economic pressures or positively impacted by more Americans staying home and watching more video.

“Clearly, when we reoriented our operations to the COVID protocol, we prioritized service. We prioritized service restoral over new installations. And as a result of that, we did see softening of gross add volumes in what I would classify as our traditional, more capital-intensive products like DirecTV or U-verse offerings,” McElfresh said.

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RELATED: AT&T under pressure again to sell DirecTV: report

However, he said that due to consumers not wanting technicians visiting their homes, connectivity to video services remained very high in those households.

During the first quarter, AT&T lost 897,000 premium video subscribers – from its DirecTV and U-verse services – and another 138,000 AT&T TV Now subscribers, totaling 1.035 million subscribers lost. The decrease was 65.1% more than the 627,000 net subscribers lost in the same quarter of 2019.

Moving forward, AT&T has its video strategy aligned around AT&T TV and HBO Max. McElfresh said that his company’s future growth exists on those two software-delivered, capital-light, wide addressable market product sets. However, he insisted that DirecTV will continue to be smaller part of AT&T’s video strategy.

“Where there is not competitive broadband available for a household or consumer, our lead offer was, is and will be our DirecTV satellite offer. It is the best alternative option because broadband is not available in the rural parts of the states and in some cases, in some suburb areas,” McElfresh said.

Both AT&T TV and HBO Max are relatively new to the market and AT&T has yet to break out subscriber numbers for either service. According to Wells Fargo analyst Jennifer Fritzsche, AT&T CFO John Stephens said today during an investor conference that the company will provide HBO Max metrics along with the company’s second-quarter results. He did say that viewership and engagement have both dramatically increased across all its video platforms, including CNN, TNT, TBS, Turner and HBO Now, and that he anticipates this to improve with the return of sports.

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