AT&T Inc. (NYSE:T) is feeling the impact of pay-TV customer losses and closure of theatres, which offset its growth in core wireless and broadband segments in its latest quarter.
AT&T’s Pay TV segment suffering subscriber loss
The company has indicated that 8.6 million customers had activated HBO Max at the end of September. This is an increase from 4.1 million in March after its launch, but it is still trailing Hulu and Disney+ rivals. However, executives of the media giant have indicated that HBO’s user base was growing at a faster rate than expected.
John Stankley, the CEO of AT&T, said that the reason the company is doing HBO Max is that they want to be where clients want to be. He added that although it is a tough environment, the company is managing well. This comes as cord-cutting grows, and the company expects to see a drop in the number of Pay-TV subscribers to around 55 million and 60 million.
This is a stark outlook for an industry that has seen a massive exodus of subscribers. At the end of 2019, there were 91 million subscribers, including 8 million subscribers who signed up to other TV bundles such as YouTube TV and Hulu. According to Bloomberg Intelligence, in the first half of this year, around 3.5 million subscribers cut the cord. The company lost 627,000 subscribers in the latest quarter.
Wireless segment added 645,000 connections in the latest quarter
Although the pay-TV segment is declining, the wireless business, on the other hand, has been flourishing. The wireless business is the main revenue generator for the company and added 645,000 subscribers. This is almost twice the phone connections gained by Verizon Communications (NYSE:VZ).
Overall the company’s revenue in the quarter was down 5% to around $42.3 billion. This is mainly attributed to a $2.5 billion revenue loss due to the closure of theatres due to COVID-19. The closures led to a decline in box-office receipts from warner Bros. movies, with wireless roaming fees also drying up.