AT&T lost 617,000 customers to DirecTV and its other TV businesses in the last quarter of 2020, ending a year in which it lost nearly 3 million customers in the category, AT&T reported today.
AT&T also informed the Securities and Exchange Commission that it has taken on “$ 15.5 billion non-monetary depreciation charges” related to DirecTV’s ongoing disaster. AT&T said the $ 15.5 billion expense reflects “changes in our management strategy and our assessment of the home video business … including our decision to operate our video business separately from our broadband and telephone operations. legacy “. That operational decision “required us to identify a separate video reporting unit and assess the recoverability of its long-lived assets and any goodwill attributed for impairment,” said AT&T.
AT&T said it also recorded “expenses of approximately $ 780 million from the loss of production and other content stocks at WarnerMedia, with $ 520 million resulting from the continuous closing of cinemas during the pandemic and the hybrid distribution model for our film. 2021 “.
The charges were added to AT&T expenses in the fourth quarter. As a result, AT&T reported a net loss of $ 13.9 billion in the quarter, compared to a net profit of $ 2.4 billion a year ago. Fourth-quarter revenue was $ 45.7 billion, down from $ 46.8 billion year after year. The net loss for the fourth quarter rocked AT&T to a net loss of $ 5.4 billion for the entire year.
“The executives called charging non-monetary accounting a sign of the aging of the pay TV unit, as the Dallas company promotes an Internet streaming model that gives its content production business a direct line to viewers.” , wrote The Wall Street Journal.
“Our biggest and most important bet is HBO Max,” said John Stankey, CEO of AT&T.
Premium TV customers flee en masse
AT&T dropped to 16.5 million customers in the Premium TV category, which includes DirecTV satellite, U-verse wired video and the latest AT&T online TV service. That’s a drop of 17.1 million three months earlier and 19.5 million since the beginning of 2020.
AT&T has accumulated several years of heavy losses from TV customers since the beginning of 2017, when it had more than 25 million users in the category. The loss of nearly 3 million customers in 2020 was an improvement over 2019, when AT&T lost 3.4 million Premium TV customers in the calendar year.
These figures do not include the streaming service formerly known as DirecTV Now, which AT&T just ended this month. The service dropped from 1.86 million subscribers in the third quarter of 2018 to 656,000 at the end of 2020. Existing customers can maintain this service, but AT&T is not offering it to new users.
DirecTV and U-verse customers have been banned for years of price increases and reduced use of promotional offers from AT&T. This is reflected in AT&T’s average revenue per user (ARPU) in the Premium TV category, which jumped from $ 121.76 per month at the end of 2018 to $ 131 at the end of 2019 and $ 137.64 at the end of 2020.
AT&T attributed the loss of 617,000 customers in the fourth quarter to “competition, lower gross additions to the continued focus on adding higher value customers and a scheduling dispute, partially offset by reduced churn.”
Video revenue fell 11.2%
AT&T reported video revenue of $ 7.2 billion in the fourth quarter of 2020, “down 11.2 percent year on year due to declines in premium and [online] subscribers, partially offset by higher premium TV ARPU and higher advertising revenues during the general election. “Operating expenses in the category were $ 7.1 billion, leaving AT&T with a profit of $ 98 million.
AT&T does not provide individual numbers for DirecTV, U-verse TV and AT&T TV. But the company said that gains in AT&T streaming TV subscribers in the last quarter helped offset losses in DirecTV and U-verse, meaning that DirecTV and U-verse together lost more than the net loss of 617,000 customers in the Premium TV category.
AT&T said it is encouraged by the progress of HBO Max, which costs $ 15 a month alone, but is also included in several packages. “The launch of Wonder Woman 1984 helped propel our domestic HBO Max and HBO subscribers to more than 41 million, two years faster than our initial forecast,” said Stankey.
Selling DirecTV at a loss
AT&T bought DirecTV for $ 49 billion in 2015, but has been trying to sell the besieged satellite division in recent months. AT&T is reportedly close to an agreement to sell a stake in DirecTV to TPG, a private equity firm, but AT&T may retain control of the company. The offers for DirecTV estimated the subsidiary at about $ 15 billion.
Fiber gains, DSL losses
AT&T’s broadband subscriber base remained stable at 14.1 million in the quarter. The company increased fiber subscribers to the site from 4.68 million to 4.95 million in the fourth quarter of 2020, but fell from 8.98 million to 8.74 million in fiber to the node and from 440,000 to 407,000 in its outdated DSL service. AT&T stopped accepting new DSL customers in October 2020.
AT&T said its fourth quarter broadband revenue was “$ 3.1 billion, down 1.4 percent year on year due to declines in legacy services partially offset by higher IP broadband ARPU. resulting from an increase in high-speed fiber customers and price actions. ” Operating expenses were $ 2.8 billion.