AT&T revenue falls short of estimates as satellite TV sheds subscribers

AT&T missed fourth-quarter revenue estimates on Wednesday as another fall in subscriptions to satellite TV provider DirecTV overshadowed better-than-expected sign-ups in monthly phone subscribers.

AT&T has spent a combined $134 billion on DirecTV and Time Warner to transform itself into a media company, but is struggling to stem the loss of valuable satellite subscribers as audiences cut the cord and switch to streaming services.

Revenue from the entertainment segment, which includes DirecTV, fell 6.1% from the previous year to $11.23 billion.

AT&T said it lost 945,000 “premium” TV subscribers during the fourth quarter, including from DirecTV, and a smaller number of cable TV subscribers. Analysts at MoffettNathanson had estimated AT&T would lose a net 641,000 satellite customers.

To counter the loss of customers to streaming platforms like Netflix and Amazon.com’s Prime, AT&T plans to launch its own streaming platform HBO Max in May.

The company said it added a net 229,000 new phone customers in the quarter. Analysts had estimated the company would add 145,000 phone subscribers, according to research firm FactSet.

AT&T reaffirmed its 2020 guidance with plans to invest between $1.5 billion and $2 billion on streaming content in 2020, and an additional $1 billion in 2021 and 2022.

Total operating revenue in the quarter ended Dec. 31 fell to $46.82 billion from $47.99 billion a year earlier. Analysts were expecting $46.96 billion, according to IBES data from Refinitiv.

The WarnerMedia segment, which includes premium TV channel HBO, reported revenue of $8.92 billion, missing analysts’ estimates of $9.03 billion. The company said the fall in revenue from WarnerMedia was because it stopped licensing content, for example popular sitcom “Friends,” to other streaming services like Netflix as the launch of HBO Max nears.

Net income attributable to AT&T fell to $2.39 billion, or 33 cents per share, from $4.86 billion, or 66 cents per share, a year earlier.

AT&T reported a profit of 89 cents per share, beating Wall Street estimates of 87 cents per share.

The company announced a three-year cost-cutting plan in October, including asset sales worth up to $10 billion to pay off debt, bowing to pressure from activist investor Elliott Management which questioned its spree of expensive acquisitions.

AT&T has appointed Seagate Technology chairman Stephen Luczo to help with corporate development and finance and will name another board member this year.

The company’s shares traded at down marginally at 38.41 in pre-market trading.