AT&T lost 946,000 TV subscribers in Q2 2019, a loss that the company attributed to price increases, competition, and other factors.
AT&T reported a net loss of 778,000 subscribers in the “Premium TV” category, which includes its DirecTV satellite and U-verse wireline TV services. AT&T attributed this loss to “an increase in customers rolling off promotional discounts, competition, and lower gross adds due to a focus on the long-term value customer base.”
AT&T also lost 168,000 subscribers of DirecTV Now, an online service with linear channels that’s similar to traditional satellite and cable TV. AT&T said the DirecTV Now customer loss was “due to higher prices and less promotional activity,” meaning that customers have balked at price increases and a refusal to extend discounts.
The Premium TV loss brought AT&T down to 21.6 million customers in that category, while the DirecTV Now loss brought that service down to 1.3 million customers. Including both, AT&T’s total number of video subscribers dropped from 25.4 million in Q2 2108 to 22.9 million in Q2 2019.
The loss of 946,000 TV subscribers easily outstripped last quarter’s AT&T net loss of 627,000 subscribers. “AT&T said it expects a similar level of video losses to continue in the current quarter,” according to Reuters.
AT&T’s quarterly video revenue fell 1.7% year over year, dropping to $8 billion.
Losses follow DirecTV and Time Warner buys
When the Department of Justice tried to stop the merger with Time Warner, AT&T told a judge in a May 2018 court filing that the merger “will enable the merged company to reduce prices.” Instead, AT&T raised prices for DirecTV Now multiple times. DirecTV Now currently offers two plans that cost $50 or $70 a month, and the service charges extra for premium networks. AT&T also raised prices for its DirecTV satellite and U-verse TV services in January while simultaneously making it more expensive for customers to cancel TV or Internet service.
AT&T’s TV losses were much higher than Comcast’s, which lost 209,000 residential video customers in the quarter to bring that company’s total down to 20.6 million.
AT&T is facing a class-action complaint accusing it of lying to investors in order to hide the failure of its DirecTV Now streaming TV service. AT&T told investors that DirecTV Now was succeeding even as its subscriber base fell due to price increases and the discontinuance of promotional discounts, the lawsuit alleges.
AT&T is trying to prop up its streaming business with a new service called HBO Max, which will debut in spring 2020. AT&T is taking some Time Warner shows off Netflix in order to give exclusives to HBO Max.
AT&T also lost 34,000 residential broadband subscribers this past quarter, lowering the total to 14.4 million. The losses came from slower-speed broadband services, and they were offset by AT&T raising its fiber subscriber base from 3.1 million to 3.4 million. IP broadband revenue rose 6.5% year over year, hitting $2.1 billion in Q2 2019, “due to the continued shift of subscribers to higher-speed services, including AT&T Fiber, which was partially offset by declines in slower speed subscribers,” AT&T said.
The AT&T Entertainment Group, which includes video, broadband, and wireline phone service, reported $11.4 billion in quarterly revenue and $1.5 billion in operating income. Respectively, those numbers were down 1% and up 2.6% year over year.
The company’s total revenue—including its lucrative mobile business—was $35.5 billion, up 0.3% year over year. Operating income was $8.7 billion, up 3.8% year over year. The mobile business accounted for nearly half of AT&T’s revenue and two-thirds of its operating income.