AT&T 3Q Revenue Drops Five Percent

AT&T Inc.’s big media bets dragged down results in the latest quarter, as closed movie theaters and pay-television customer losses offset the growth at its core wireless and broadband businesses.

The Wall Street Journal reports the telecom and media giant said Thursday that 8.6 million customers had activated HBO Max, its Netflix-like streaming video service, by the end of September, up from 4.1 million shortly after its May launch. The total still trails rivals Disney+ and Hulu, but AT&T executives said HBO’s user base was growing faster than expected.

“The reason we’re doing HBO Max is because we want to be where the customers want to be,” AT&T Chief Executive John Stankey said Thursday during a call with analysts. “It’s a tough environment, but we’re managing well.”

The wireless business, which remains the heart of AT&T’s profit engine, added 645,000 postpaid phone subscribers. That is more than double the phone connections gain reported by Verizon Communications Inc. during the same period.

AT&T’s pay-TV division continued trending in the other direction, shedding 627,000 video customers. That result was still an improvement over the roughly one million video customers lost in each of the previous two quarters. The unit, which includes DirecTV, has suffered the lion’s share of cord-cutting in recent years, prompting the company to explore a sale of the satellite business.

Overall, AT&T’s quarterly revenue dropped 5% to $42.3 billion. The company attributed a roughly $2.5 billion revenue loss to Covid-19, as theater closures shrank box-office receipts from Warner Bros. movies and wireless roaming fees dried up.

AT&T and media rivals Walt Disney Co. and Comcast Corp. have started cutting thousands of jobs to offset business lost to the coronavirus pandemic. The virus has sapped the advertising market and delayed the release of major movies.

That market pressure prompted WarnerMedia to start a broad corporate shake-up to trim overhead costs and turn the movie-and-film producer into a more unified company. Executives seek to cut the division’s expenses by as much as 20%, according to people familiar with the plans.

AT&T’s overall quarterly profit fell to about $2.8 billion, or 39 cents a share, compared with about $3.7 billion, or 50 cents, a year earlier. The result included about 21 cents of per-share costs tied to the pandemic.