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The company saw its pay-TV subscribers contract quarter after quarter as customers cut the cord in favor of streaming services. She spent tens of billions of dollars to acquire new assets to end the bleeding, including the $ 81 billion acquisition of Time Warner. And, to make matters worse, the Department of Justice appealed the merger.
Investors looking for certainty about AT & T's third quarter results will not find much comfort.
The company announced Wednesday an adjusted profit of 90 cents per share for a $ 45.7 billion business figure. Analysts' estimates were then down to 94 cents per share, just shy of revenue estimates of $ 45.4 billion. The stock, which was down 10% this year before the market closed on Tuesday, lost 6.4% in morning trading.
The increase in revenues, up 15% from one year to the next, is mainly due to the acquisition of Time Warner, which included HBO, Warner Bros and CNN.
It was the first quarter to include three months of ownership of Time Warner – now WarnerMedia -.
It was a good quarter to own these assets. Hits like "Crazy Rich Asians", "The Meg" and "The Nun" have dominated the national box office for five consecutive weekends. The assets of the new media were "immediately relutifs", noted the company, contributing up to 5 cents earnings per share.
This helped offset the setbacks elsewhere. AT & T lost 359,000 subscribers to satellite television, far more than predicted by the 245,000 subscriber loss analysts. This is also an acceleration compared to the same quarter last year, with 251,000 subscribers lost.
There was better news in the mobile sector, where AT & T won 69,000 national postpaid subscribers instead of losing 22,000 as analysts expected, although that went badly compared to its rival .
Verizon Communications
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It is not certain that Time Warner's assets can actually reverse the long-term decline of the company. A report from consulting firm MoffettNathanson pointed out that, among all the self-praising headlines, "virtually every part of AT & T's legacy is diminishing."
The company has also contracted a huge debt, with a balance sheet tripled earnings before interest, taxes, depreciation and amortization – a "shocking debt level for a society where Ebitda and revenues decline even as GDP rises, As MoffettNathanson said.
AT & T General Manager, Randall Stephenson, said the company was on track to achieve the goal of "2.5 times the debt / EBITDA ratio" by the time the end of 2019.
However, AT & T also announced the launch of a live streaming service for consumers by the end of 2019, taking advantage of its new multimedia assets.
Doubling this content makes sense, but competing
Netflix
,
Hulu, Amazon and
Disney
of the
The streaming service to launch means that AT & T may have trouble blocking subscribers. It also depends on the Department of Justice's appeal of the failed merger. Investors must remain cautious.
Write to Elizabeth Winkler at elizabeth.winkler @ wsj.com @ wsj.com
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