AT&T counts Covid costs as it loses nearly a million video subs in Q2 2020 | Major Businesses | Business
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Despite reporting what it said were gains in IP broadband ARPU and solid performance in entertainment group business, AT&T has endured continued bleeding of video subscribers in the second quarter of its current financial year.
HBOMax 28May2020
For the three-month period ended 30 June 2020, the comms giant said that the Covid-19 pandemic had impacted revenues across all segments. Indeed total consolidated revenues for the quarter were $41.0 billion, $4 billon less than in the year-ago quarter, and the operator highlighted declines at WarnerMedia which included lower content and advertising revenues partly due to Covid-19. Revenues also declined in domestic video and legacy wireline services, and Latin America was impacted by foreign exchange pressure.

Operating expenses inched downwards to $37.4 billion while lower WarnerMedia costs, primarily associated with lower revenues, lower entertainment group costs and lower Latin America costs were offset by a goodwill impairment at Vrio, severance charges and incremental Covid-19 costs. Compared with the second quarter of the previous year, Q2 operating income more than halved to was $3.5 billion, attributed to Vrio goodwill impairment, severance charges, Covid-19 costs and the net impact of lower revenues and operating expenses.

Operating income margin was 8.6% versus 16.7% in the year-ago quarter. When adjusted for the non-cash Vrio goodwill impairment, amortisation, severance charges, merger- and integration-related expenses and other items. Operating income fell 10% on an annual basis to $9.0 billion.

The Entertainment Group’s results were said to have been impacted by lower video, advertising and commercial revenues as well as the pandemic. Looking at the performance of individual lines, even though it had a total of 17.7 million premium TV subscribers, AT&T reported 886,000 net losses for the quarter for its DirecTV and U-verse products, 91,000 attributed to Keep America Connected programmes, and a net loss of 68,000 AT&T TV Now subscribers. Yet the company noted highlights for the quarter being gains in AT&T TV and the successful launch of HBO Max with what the company called was strong engagement. Fibre demand remained solid with 225,000 net additions but broadband net loss of 102,000 includes 159,000 of accrued disconnects.

Going forward, the second quarter results noted that among the company’s key 2020 priorities would be a market focus on software-based entertainment, namely HBO Max and AT&T TV.