AT&T Earnings: WarnerMedia Revenue Rises 30%

AT&T Inc.’s second-quarter revenue rose 7.6% driven by new subscribers to its cellphone service, leading it to increase its financial outlook for the year, reports The Wall Street Journal.

The media and telecommunications giant said it is focusing on continuing to expand its broadband business and cellphone subscriber base, its core profit engine. The company now expects consolidated revenue growth between 2% and 3%, up from a prior view of about 1% growth.

AT&T has boosted its wireless subscriber count over the past year by dangling significant smartphone discounts in exchange for long-term commitments, prompting rivals Verizon Communications Inc. and T-Mobile US Inc. to respond with their own promotions.

The discounts, while expensive, helped AT&T post a net gain of 789,000 postpaid phone subscribers during the second quarter. Investors value postpaid plans, which charge customers for service after it is rendered, because account holders tend to provide dependable profits.

Verizon on Wednesday said it gained 275,000 postpaid phone customers during the most recent quarter. T-Mobile is slated to report its results next week.

On the entertainment side, WarnerMedia’s HBO unit ended the quarter with 47 million domestic HBO and HBO Max subscribers, up from 44.2 million three months earlier. Those figures included new subscribers to HBO Max as well as customers paying for traditional HBO service, usually through a cable distributor.

WarnerMedia revenue was up about 31% in the most recent quarter, reflecting a partial recovery from the impact of the pandemic as advertising sales returned. The entertainment company also highlighted higher content sales and more revenue from subscriptions as HBO Max grew.

AT&T in May decided to spin off its media brands—including HBO, CNN, TNT, TBS and the Warner Bros. studio—into a new publicly traded company with Discovery Inc. The move followed a February deal to spin off a 30% stake in AT&T’s pay-TV unit while giving up operational control of the business, which will be called DirecTV upon closing. AT&T also put much of its digital advertising business, known as Xandr, on the market in 2020.

The company’s reported net debt fell by nearly $1 billion from about $169 billion at the end of the prior quarter. The company said it expects the DirecTV stake sale to close within the next few weeks, allowing it to pay off more debt in the years ahead.