AT&T Sees Dip in Pay TV Subscribers in Fourth Quarter, Meets Profit Expectations
The telecom giant, led by CEO Randall Stephenson, added DirecTV Now customers but continued to lose U-verse subscribers.
Telecom giant AT&T, which has agreed to acquire Time Warner for $85.4 billion, on Wednesday reported a slight loss in TV subscribers as it reported its fourth-quarter results.
During the latest quarter, AT&T posted earnings of $2.44 billion, down from a year-earlier profit of $4.01 billion, on overall revenue down slightly to $41.84 billion, compared to a year-earlier $42.1 billion. Analysts projected $42.1 billion in revenue for the latest quarter.
The telecom giant also met Wall Street's per-share profits expectations with adjusted earnings at 66 cents per share. AT&T ended the fourth quarter with 25.26 million video subscribers, down from a year-earlier 25.4 million subs.
The telecom giant added 235,000 DirectTV satellite subscribers, but that was offset by 262,000 U-verse sub losses. AT&T also said DirecTV Now launched with more than 200,000 subscribers.
The deal for Time Warner, if approved by the Justice Department and other regulators, will combine one of the nation's largest telecommunication companies with a content giant that owns HBO, CNN, TBS, TNT and Warner Bros.
"We remain confident the [Time Warner] deal will be approved later this year," AT&T CFO John Stephens told analysts about the Time Warner deal during an afternoon call. He added AT&T expected to benefit from a "better regulatory environment" opened up by the deregulating Trump administration, expected to include gains should the corporate tax rate come down.
In the face of criticism that the proposed merger spurs on consolidation of the entertainment and media industry, AT&T CEO Randall Stephenson has called the $85 billion deal a form of vertical integration that, while inviting merger conditions, shouldn't be blocked.
That overture came as President Donald Trump objected to the Time Warner takeover during his election campaign earlier this year. Stephenson on Wednesday told analysts that he met a couple weeks ago with then president-elect Trump and tax reform and cutting red tape were on the agenda, while the Time Warner deal was left off. "I gotta tell you I was impressed. I was meeting with a CEO, it was obvious," the exec added.
Stephenson said AT&T would "step up" its overall investment if Congress was successful in bringing down the corporate tax rate and "clearing the underbrush" of regulation on the telecom industry. "As we look forward to bringing Time Warner into the fold, and doing some very unique things with media and entertainment content in this foundation of networks, we're feeling positive and excited about bringing that together," he told analysts.
Stephenson also addressed Trump picking Obama-era net neutrality foe Ajit Pai as head of the FCC, the chief regulator of the nation's airwaves and internet connections. He argued that, while AT&T continued to support net neutrality, he'd welcome Pai choosing to "address some of the issues that are suppressing investment" by deregulating telecom and media players.
AT&T execs also expressed hope future big media and telecom mergers may get a friendlier review under a Pai-led FCC. "We're optimistic in terms of what a chairman Pai would bring to the industry," Stephenson told analysts.