AT&T’s traditional video services, DirecTV and U-verse, lost a combined 395,000 subscribers during the third quarter and virtual MVPD DirecTV Now saw its growth slow.
Overall, AT&T said it lost a net 346,000 video subscribers, a number that was offset slightly by 49,000 new DirecTV Now subscribers. The rate of growth for subscribers at DirecTV Now slowed substantially from the 342,000 new subscribers it added during the previous quarter, when AT&T posted a net addition of 80,000 video subscribers.
AT&T said the subscriber losses were partially due to the company focusing on improving profitability and beginning beta testing of a new streaming video device.
AT&T CEO Randall Stephenson said that his company is nearing completion of its fiber build (now with 10 million homes passed) and making pricing moves on video as part of “laying the foundation for stabilizing our Entertainment Group profitability in 2019.”
AT&T may be seeing profitability on the horizon but, at least for this quarter, it’s facing the reality of sinking revenues and net income. The company posted an 8.5% drop in video revenues, down from more than $9 billion in the year-ago quarter to nearly $8.3 billion. The decline offset a 6.7% increase in broadband revenues and led overall Entertainment Group revenues to fall 7% to about $11.6 billion. Net income during the quarter followed suit and fell 14% to about $1.1 billion.
While the Entertainment Group lagged, AT&T overall posted positive numbers, with consolidated revenues up 15.3% to about $45.7 billion and operating income up 25.2% to nearly $7.3 billion.
The growth could be largely attributed to the addition of the WarnerMedia group, established after AT&T completed its $85 billion acquisition of Time Warner. Quarterly comparisons are not available yet for the still-integrating segment, but AT&T revenues were up across Turner, HBO and Warner Bros. In all, the segment pulled in $8.2 billion in revenues and more than $2.5 billion in total segment operating contribution.