AT&T video business stumbles in Q3 as HBO Max projected for 50MN subs | Major Businesses | Business | News | Rapid TV News
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As has been the case for the industry as a whole, the traditional TV business has struggled at comms giant AT&T as it revealed its third quarter results and just on the verge of the introduction of its HBO Max direct-to-consumer service.

HBOMax logo 10July2019

For the third quarter ended 30 September 2019, AT&T’s entertainment group actually showed solid performance with video and broadband ARPU gains driving operating income up 4.8% year to date. However the company revealed that video subs had been impacted by a focus on long-term value customer base and carriage disputes. This led to the company showing a 1.163 million net loss in premium TV subscribers, totalling 20.4 million, and a 195,000 net loss for AT&T NOW which now boasts 1.1 million customers.

Looking at the WarnerMedia division, overall HBO revenues up 10.6% from higher content sales and stable subscription revenues. HBO revenues and operating income saw double-digit growth, thanks to strong content sales driven by international licensing. Its operating income rose 13.7%. Turner revenues were stable with expanding margins and operating income up 2.6% on an annual basis, while Warner Bros. margins expanded despite what AT&T called challenging year-over-year comparisons.

Speaking on the analyst’s call for the results, AT&T senior EVP and CFO John Stephens revealed that expects its premium video losses have peaked. “We had about 225,000 net losses due to programming blackouts,” he noted. “Our gross adds were down about 400,000 due to new, higher intro pricing and credit thresholds, as well as more targeted promotions, and we continue to work through customers rolling off 2 year price locks. Those video losses also impacted our broadband numbers, especially our bundled customers, but we did have more than 300,000 AT&T Fibre net adds in the quarter.”

However, CEO Randall Stephenson shed most light on where the company would be going, driven by the launch of its HBO Max offer on 29 October which he said would be the workhorse for the company’s video product as it moves into 2020. He predicted that HBO Max would stand apart from direct-to-consumer competitors such as Netflix and Disney+ which he said would be a 50 million subscriber business within four to five years.

“A range of investment is going behind HBO Max...We comfortable with that level in what you called a crowded field, I actually think the field in terms of where we intend to play is not that crowded. We intend to play at a significant level, and we're starting with a product called HBO, which has a very significant position in the marketplace. This is a product that's going to be very different from anything else that you've seen in the market so far. This is not Netflix, this is not Disney, this is HBO Max, and it's going to have a very unique position in the marketplace. And I would tell you we feel very comfortable at these investment levels, that we can do something very significant in the market and drive some significant subscriber gains. This is going to be a meaningful business to us over the next 4 or 5 years. And we're talking a 50 million subscriber business.”