AT&T says it hasn’t seen a coronavirus cord cutting effect yet

AT&T CEO Randall Stephenson said the company will continue to invest in 5G, broadband and HBO Max, which is launching May 27. (AT&T)

AT&T said it hasn’t seen much of an acceleration or change in its rate of video subscriber losses even as the COVID-19 crisis significantly impacts the U.S. economy.

During the company’s earnings call Wednesday, COO John Stankey said that “if anything, it’s slowed a little bit as people are engaging more with the product and clearly at home with more time, gaining more utility out of it.” However, he said AT&T is expecting a stressed economic environment in the second half of 2020.

“One would conclude in a stressed economic environment there are probably going to be adjustments people make within their lifestyles and their homes. I would expect that we would see more pressure on [video subscriber losses] as we move through the year,” said Stankey. “It hasn’t manifested itself right now in terms of decisions to remove.”

Even without a discernible impact from COVID-19, AT&T still 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 in the first quarter.

RELATED: AT&T lost 1 million video subscribers in Q1

AT&T’s DirecTV and U-verse businesses continue to lose video subscribers at a rapid pace, but the company plans to shore up its video business with AT&T TV, its new IP-based TV service that launched in the first quarter. Stankey said the company is “right on the plan” with AT&T TV in terms of expected volume. CFO John Stephens said AT&T TV’s early subscriber growth was in line with what the company expected despite the impact of COVID-19.

As the COVID-19 crisis continues, AT&T has had to make adjustments to its operations. However, CEO Randall Stephenson said the company will continue to invest in 5G, broadband and HBO Max, which is launching May 27.

AT&T has announced distribution agreements (including YouTube TV and Charter) for HBO Max that cover nearly 50% of the HBO embedded wholesale base and more than two-thirds of the retail base. Stankey said more distribution agreements will be announced prior to the service’s launch.

HBO Max appears to be launching with limited original content but Stankey said that once the studios can get back to production after the COVID-19-related shutdown, WarnerMedia will get back to adding new content for release in the fall and winter. Factoring in the production pauses and movie theater closures, AT&T said it recorded a $400 million revenue impact from COVID-19 on WarnerMedia business during the quarter.