AT&T has become a behemoth with substantial business interests in wireless, pay TV, media, entertainment and advertising. One media analyst predicts that the company will eventually be broken up.
Craig Moffett, analyst and founder at MoffettNathanson, spoke with CNBC about how AT&T’s DirecTV unit was a “terrible acquisition,” and that “the wheels are falling off.” He also said that WarnerMedia already looks to be problematic in some areas for AT&T.
“It’s hard to see that portfolio staying together forever. Somebody is going to come into AT&T eventually and whether it’s in three years, five years, whatever, they are going to break that company up,” Moffett said.
He said that if there comes a day when AT&T spins off its WarnerMedia business to refocus on its core telecom business that Comcast/NBCUniversal could also split, and NBCU could potentially combine with WarnerMedia.
“I think it’s fair to say that the companies that have diversified are not doing as well,” Moffett said, pointing toward both AT&T and Comcast as examples of where everything except the core businesses are struggling. He also said that Verizon, which is a primarily wireless company, posted “god awful” wireline results today. “The diversification strategies are not working.”
Moffett’s comments about AT&T come after another troubled quarter for the company. AT&T on Wednesday reported fourth-quarter earnings marked by net losses of 945,000 premium video subscribers from its DirecTV and U-verse businesses and another 219,000 subscribers to its AT&T TV Now streaming video service. The company lost 1.164 million video subscribers all together and a net 3.43 million traditional video subscribers in 2019.
The WarnerMedia business also experienced a downturn during the fourth quarter, which AT&T attributed in part to forgone licensing revenue as the company gets ready to launch its HBO Max streaming service in May.
AT&T's consolidated revenues for the fourth quarter totaled $46.8 billion, down from $48 billion in the year-ago quarter. Operating income was $5.3 billion versus $6.2 billion, which the company said was partly due to a $1.3 billion write-off of certain copper facilities.