AT&T Loses Pay TV Subscribers in Second Quarter

Randall Stephenson - Getty - S 2016
Getty Images

Randall Stephenson - Getty - S 2016

The telecom giant saw a continued trend as gains in DirecTV customers failed to offset a loss in U-Verse subs.

AT&T on Thursday reported a continued loss in TV subscribers, as the second-largest U.S. wireless carrier reported its second-quarter results.

AT&T posted earnings of $3.4 billion, up 10 percent from a year-earlier profit of $3.1 billion, on overall revenue up 22 percent to $40.5 billion, largely due to acquiring DirecTV. The telecom giant also met Wall Street's profits expectations with adjusted earnings at 72 cents per share.

At the same time, AT&T ended the second quarter with 25.3 million video subscribers, down year-over-year as DirecTV added 342,000 new users, but U-verse lost 391,000 subs, for a net loss of 49,000 customers.

AT&T's acquisition of DirecTV closed in July 2015, and the company said it has since added nearly 1 million U.S. satellite TV customers. At the same time, the telecom giant is losing U-Verse video customers more quickly than it is adding DirecTV subscribers.

AT&T posted a net loss of 54,000 video subscribers during the first quarter. "One year after our acquisition of DirecTV, the success of the integration has exceeded our expectations," AT&T chairman and CEO Randall Stephenson said Thursday in a statement.

"We plan to serve every segment of the video industry and offer customers their favorite content virtually wherever and whenever they want it," he added. The entertainment group added 54,000 internet subscribers during the second quarter to bring its total to 12.6 million IP broadband subscribers.

After acquiring DirecTV, AT&T has been bundling wireless services with entertainment and broadband products to woo subscribers away from rivals Verizon Communications and T-Mobile U.S.

AT&T CFO John Stephens told analysts during a conference call on Thursday that the company was getting better at bundling, and the second quarter is traditionally a soft period for adding video subscribers on both the U-verse and DirecTV fronts.

"As we see the trends in bundling improving and attachment rates improving, we feel really good about the opportunity to improve our trends and get to our goal of positive video adds by the end of the year," he said.

News of AT&T's continuing reduced video subscriber trend came on the same day Dish Network reported it lost more pay TV subscribers than in its own year-ago period, and more than Wall Street had expected.