AT&T subscriber losses highlight cord-cutting threat

Marco Green
October 12, 2017

Reacting to AT&T's Stock Market guidance that it expects to lose 390K traditional video subscribers, netted against a gain of 300K OTT subscribers, Craig Moffett, Partner and Senior Analyst at research firm MoffettNathanson has suggested that, in addition to general cord-cutting pressures, satellite TV is particularly affected.

AT&T Inc. said Wednesday that recent hurricanes to hit the US and Caribbean and earthquakes in Mexico would reduce third-quarter earnings per share by 2 cents and revenue by almost $90 million.

Shares in AT&T Inc (NYSE:T) were lower in pre-market trading after the telecoms giant issued a profit warning on Wednesday evening. It is reasonable to expect a weak quarter for the whole pay-TV industry.

AT&T said it added roughly 300,000 subscribers to DirecTV Now, its cheaper option for customers who want to stream television over the internet.

As MoffettNathanson analyst Craig Moffett observed, the net loss means DirecTV is losing about 390,000 traditional subscribers - customers that had been paying at a higher rate than the low-priced DirecTV Now service.

Commenting on an 8-K form - a current report U.S. companies must file with the country's stock exchange to announce major events that shareholders should know about - filed after close of business on 11 October, analyst MoffettNathanson has sounded the alarm on what is a significant trend in the company's video business.

AT&T is not the only pay-TV provider to point to a more competitive environment.

AT&T said in its filing that the decline of traditional video subscribers will negatively impact its entertainment group revenue and margins. The company said that it saw a loss of subscribers due to competitors' pricing.

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