DirecTV Adds 161,000 Video Subscribers
Parent company AT&T exceeded expectations, sending the stock higher in after-hours trading.
AT&T's DirecTV unit managed to gain 161,000 users in the most recent quarter, courtesy of DirecTV Now, which more than made up for losses at the satellite service. The company said Wednesday, though, that when traditional DirecTV is added with the streaming service, subscribers are down 1 percent year-over year to 25.2 million.
AT&T announced last month that its DirecTV Now streaming service surpassed 1 million subscribers, but Wall Street remains nervous about its traditional satellite TV product. On Wednesday, it said it added 368,000 streamers, meaning it lost roughly 207,000 TV subs.
AT&T's quarterly financial report comes as it faces scrutiny from the Justice Department over its plan to merge with Time Warner. Early on, President Donald Trump called the impending merger "not good for the country," though he hasn't weighed in recently.
The telecommunications company last month announced $1,000 bonuses to 200,000 employees in celebration of Trump's bill that reduces the amount of taxes corporations will pay. Last year, AT&T's tax rate was nearly 33 percent in 2016, but under the new law it cannot exceed 21 percent.
AT&T was expected to earn 65 cents per share on revenue of $41.19 billion, and it surpassed those numbers, hence the stock was flying 4 percent higher after the closing bell on Wednesday.
AT&T CEO Randall Stephenson said during a conference call on Wednesday he was "obviously surprised" the government has been trying to block his company's acquisition of Time Warner. He expects the matter to be litigated in court, with a trial date scheduled to begin March 19. "It is a classic, vertical merger between two companies that don't even compete with one another," he said.
Stephenson praised DirecTV Now for having a "terrific first year," and he said a streaming box is in the works that will work with Netflix, DirecTV Now and other streamers. AT&T CFO John Stephens said during Wednesday's call with Wall Street analysts that AT&T Now has 1.2 million subscribers.
The CEO again called on an "internet bill of rights" to settle once and for all the issue of so-called "net neutrality," since the four last presidents have each taken slightly different approaches to the matter.
"Unquestionably, the biggest development that came out of Washington last year was tax reform," Stephenson said. "You've seen it. Company after company has already announced increase investment, hiring, wage increases and employee bonuses, and we were first out of the gate."