Enlarge /. A DirecTV satellite dish seen outside a bar in Portland, Oregon in October 2019.
Getty Images | Hapabapa
AT&T lost almost 1 million TV customers in the second quarter of 2020, continuing a rapid exodus of users from DirecTV and other video services operated by AT&T.
In the three months ended June 30, AT&T reported a net loss of 954,000 video customers on earnings results released today. These include a net loss of 886,000 customers from AT & T's "Premium TV" services, a category that includes DirecTV satellites, U-Vers landline services, and the AT & T TV online service that mimics cable television. Another 68,000 customers left AT&T TV Now, a separate streaming service formerly known as DirecTV Now.
Higher prices helped drive customer losses. As in previous quarters, AT & T's practice of offering fewer special offers at special prices has contributed to the loss of customers for AT & T TV Now. AT&T said the premium TV loss was "due to competition and lower gross gains as we continue to focus on adding higher quality customers."
The recent quarterly loss caused AT&T to record 18.4 million video customers, including Premium TV and AT&T TV Now, after nearly 25.5 million in mid-2018.
As of June 30, approximately 91,000 customers who are counted as net TV losses still had a service. These are subscribers "for whom we have agreed not to end the FCC's" Keep Americans Connected Pledge "service," said AT&T. "For reporting purposes, the company counts these subscribers as if they had disconnected the service . "
This FCC promise was implemented in response to the coronavirus pandemic, but expired on June 30, so these customers could actually be separated if they don't pay back what they owe. The promise technically only affected broadband and telephone services, but AT & T's statement shows that the company also applied it to TV customers, or at least to customers who bundled TV with telephone or broadband.
HBO Max has 4 million subscribers
AT&T is trying to revive its video assets with HBO Max, which is due to the acquisition of Time Warner Inc. However, AT&T said HBO sales in the second quarter were $ 1.6 billion, a decrease of 5.2 percent from a year earlier, due to a decrease in subscription revenue and content and other revenue . "HBO's operating costs were $ 1.5 billion, up 32.5 percent year over year, primarily due to higher program costs and HBO Max related expenses," said AT&T.
HBO Max was launched in May and has 4 million customers, including "approximately three million retail customers" and another million activations that were made through AT&T platforms (i.e. bundled plans), The Verge wrote today.
"Through cable customers and HBO Now subscribers, the company already had more than 30 million subscribers to switch to HBO Max," wrote The Verge. "(AT&T CEO John) Stankey noted (in a call for profit today) that it was slow to get people subscribing to HBO through traditional linear cable packages to sign up for HBO Max, and that's an area they want to focus on. "
At $ 15 a month, HBO Max offers only a fraction of the revenue per customer that AT&T generates with satellite and cable-like services. The average AT&T revenue per user for Premium TV is $ 124.98 per month. This is an increase of $ 112.19 in mid-2018 due to AT & T's price increases and reduced use of promotions.
AT&T also lost some broadband customers in the last quarter, falling from 14.05 million to 13.94 million. Fiber customers rose from 4.1 million to 4.32 million over the three-month period, but losses in the DSL category reduced the total number of customers. The average revenue per broadband user was $ 51.61 per month.
The pandemic's revenue impacted revenue
Across the company, AT&T operating income decreased from $ 44.96 billion in the second quarter of 2019 to $ 40.95 billion in the second quarter of 2020. Net income decreased from $ 3.97 billion to $ 1.56 billion -Dollar back.
The pandemic affected AT&T results. AT&T estimated the impact of the pandemic on second quarter sales at $ 2.8 billion and $ 510 million on EBITDA (earnings before interest, taxes, depreciation and amortization). AT&T said this was due to:
(D) The following pressure related to COVID-19: (1) the cancellation and postponement of sporting events on television, which results in lower advertising revenue and associated costs, (2) the closure of cinemas and the postponement of cinema releases, leading to lower content results in revenue and related expenses, (3) imposing travel restrictions that result in significantly lower international wireless roaming services that do not have a directly correlated cost reduction and that have the greatest impact on profitability, (4) closings of retail stores that result in lower sales of wireless devices contribute with a corresponding reduction in equipment costs and (5) unfavorable exchange rate pressures in Latin America.
AT&T said its EBITDA had contributed an additional $ 320 million to the pandemic in the form of "additional costs related to voluntary corporate actions that primarily protect and compensate front-line employees and contractors and disruption costs WarnerMedia accrues ".