[ad_1]
AT & T plans to lose about 1.1 million TV customers in the third quarter, facing pressure from a group of investors claiming that AT & T's increased focus on the television sector was a big mistake.
John Stephens, AT & T's Chief Financial Officer, told shareholders that "the company expects an additional video loss of 300,000 to 350,000 times higher than the premium video results of the previous quarter", according to AT & T. As it is an additional increase over the previous quarter 's loss, this will represent a loss of more than a million TV subscribers for three month.
In the second quarter of 2019, AT & T recorded a net loss of 778,000 subscribers in the "Premium Television" category, which includes its DirecTV and U-verse satellite television services. With AT & T expecting to lose as many subscribers more The shareholder update suggests that the third quarter loss in the category will be between 1,078,000 and 1,128,000 subscribers. (An AT & T spokesperson confirmed to Ars that an expected loss of 1,078,000 and 1,128,000 subscribers in the third quarter is accurate.)
In its update to shareholders, AT & T attributed the expected loss to "aggressive cost management in retransmission negotiations, some of which resulted in a network failure of content providers and a limitation of promotional rates". AT & T said it has held a "hard line in negotiations" with programmers to control costs, but the resulting power outages scare away TV subscribers.
The projected loss does not seem to include AT & T TV Now (formerly DirecTV Now), an online service that AT & T has not included in the Premium TV category in its earnings reports. . AT & T also lost 168,000 DirecTV Now / AT & T TV Now subscribers in the second quarter, but did not specify how the service would behave in the third quarter.
Including both pay TV and streaming service, the total number of AT & T video subscribers increased from 25.4 million in the second quarter of 2018 to 22.9 million in the second quarter of 2019 This number would fall to around 21.8 million after the third quarter if AT & T TV Now remained stable.
AT & T is betting on the decline of the television business
The pay-TV sector is struggling to compete with online streaming. Despite this, AT & T has made a huge gamble on video in recent years, buying DirecTV in 2015 and Time Warner Inc. in 2018.
To get back on track, AT & T is banking on its new AT & T TV streaming service, different from AT & T TV Now, although its name is almost identical. Unlike AT & T TV Now, AT & T TV has two-year contracts, prices that automatically increase after one year, activation fees and early termination of service, regional sports fees and "some other fees and charges. additional charges ".
We do not understand why customers who have abandoned DirecTV or U-Verse would be tempted by a streaming service that duplicates the disadvantages and pricing structure of traditional cable and satellite television services. However, AT & T said that in 2020, "we expect an improvement in the trend of pay-TV subscribers thanks to a much smaller number of customers benefiting from promotional rates and the national launch of AT & T TV, which offers a streaming experience. "
AT & T said its performance for 2020 should also be helped by an increase in revenue per customer, as it limits the discounts offered to subscribers.
It does not say much, though. At its current pace, AT & T could dramatically improve subscriber trends while losing hundreds of thousands of TV customers each quarter.
An investor unveils AT & T TV's strategy
AT & T's TV strategy was criticized this week in an open letter from activist investor Elliott Management Corp., which holds a $ 3.2 billion stake in AT & T.
"Despite the claims of AT & T executives that" Pay TV is a very good, sustainable business, " [DirecTV] The deal was announced, the ecosystem of pay TV has been subjected to immense pressure since the conclusion of the transaction, "said the company's investors." In fact, trends continue to erode, as AT & T pay TV subscribers are in rapid decline, the industry especially satellite struggles powerfully. Unfortunately, it became clear that AT & T had acquired DirecTV at the highest level of the linear TV market. "
Elliott Management is also skeptical about the purchase of Time Warner. "[D]Despite nearly 600 days between signing and closing (and more than a year since), AT & T has not yet defined a clear strategic rationale for why AT & T must own Time Warner, indicates the open letter.
The purchase of DirecTV amounts to $ 67 billion and that of Time Warner to $ 109 billion, including debt.
The open letter stated that AT & T was too far away from its core business in the telecommunications sector and criticized the company for not performing as well as Verizon in the wireless sector. Elliott Management called for "significant operational improvements" and that the board of directors determines whether AT & T has "the right combination of leadership within the company". AT & T should consider divesting DirecTV and other non-core business, the open letter also said.
AT & T responded briefly stating that its management team and board of directors "will review Elliott Management's outlook in the context of the company's business strategy." However, AT & T has defended its strategy of building a "unique portfolio of high-value companies … on communication networks, media and entertainment".
"AT & T's board of directors and management team strongly believe that the targeted and successful execution of our strategy is the best way to create value for the future." shareholders, "said the company.
In addition, AT & T faces a class action claiming to have lied to investors in order to conceal the failure of its streaming TV service DirecTV Now.
[ad_2]
Source link