WarnerMedia Takes $960M Pandemic Earnings Hit, AT&T Loses 627,000 Video Subs

John Stankey
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John Stankey

The telecom giant, led by CEO John Stankey, and parent company of WarnerMedia posts its latest results.

Telecom giant AT&T on Thursday reported its third-quarter results, the second set of financials and subscriber data fully affected by the novel coronavirus pandemic.

The company said its quarterly figures included a $1.72 billion hit to quarterly earnings tied to the coronavirus pandemic, as well as $190 million in incremental costs tied to the pandemic.

For WarnerMedia, it detailed a $960 million hit from the pandemic to earnings before interest, taxes, depreciation and amortization in the third quarter ended in September, with management on the earnings call speaking of a $1.6 billion revenue hit a the unit.

AT&T, led by CEO John Stankey, also disclosed that it lost 627,000 video subscribers, including 590,000 premium TV subscribers, in the latest period and a loss of 37,000 at its AT&T TV Now streaming service, following a 68,000 loss for AT&T TV Now in the second quarter.

AT&T also reported WarnerMedia's revenue and earnings for the latest quarter. Third-quarter  revenue reached $7.5 billion, down 10.0 percent, amid declines at Warner Bros. (28 percent) and HBO (2 percent), "partially offset by an increase at Turner" of 5.6 percent. The entertainment unit posted a 36 percent drop in adjusted earnings before interest, taxes, depreciation and amortization and a 38 percent decline in operating income to $1.8 billion, with Turner's operating income drop coming in at 31 percent, Warner's at nearly 33 percent, and HBO's at nearly 92 percent.

Warner Bros.' theatrical revenue decreased "primarily due to the postponement of theatrical and home entertainment releases caused by the pandemic," the firm said, adding that the Tenet global release was "impacted by limited capacity and continued closure of movie theaters in many locations." Television product revenue fell "primarily due to lower TV licensing and lower TV production revenues due to production hiatus related to COVID-19." But Warner's operating expenses fell 26.6 percent, "primarily caused by the production hiatus and lower marketing costs, mainly from fewer theatrical and home entertainment releases."

At Turner, operating expenses soared 41 percent, driven by $600 million in sports rights costs, mainly from the return of NBA games. Advertising revenue increased "primarily due to the shift of the NBA season into the third quarter and higher news delivery, partially offset by lower overall ratings."

At HBO, operating expenses rose 55.7 percent due to higher programming costs and expenses related to the launch of HBO Max. AT&T said the HBO Max investment in the latest quarter amounted to $600 million, bringing the year-to-date figure to $1.3 billion. Quarterly subscription revenue at HBO increased due to growth in international revenues "primarily due to the May 2020 acquisition of the remaining interest in HBO Latin America Group and higher domestic direct-to-consumer subscribers, partially offset by lower domestic linear subscribers."

AT&T's net debt at the end of September stood at $149 billion.