New Path for AT&T
Growth in AT&T Inc.’s new media division helped paper over deep losses in the company’s satellite-TV business stemming from a cord-cutting trend that executives have said first drove their appetite for entertainment assets. The DirecTV satellite unit has lost more than 1 million customers after five straight quarters of declines. AT&T has offered free HBO to certain wireless subscribers and recently rolled out a $15-a-month streaming package to attract “cord cutters” abandoning more expensive traditional TV plans.
WarnerMedia helped offset the weakness in TV distribution. Revenue in its Turner division grew by about 4%, helped by stronger ad revenue. Its premium HBO division posted 13% more in revenue as subscriptions climbed. Overall, the company reported lower revenue for the three-month period ended June 30 despite getting a more than $1 billion revenue injection from Time Warner for the 16 days that AT&T owned the business during the quarter.
AT&T acquired the owner of CNN, HBO, and Warner Bros. last month in an $81 billion cash-and-stock deal that turned the Dallas-based telecommunications company into an overnight media giant. That division, now called WarnerMedia, enjoyed gains in advertising and premium subscriptions.
With the new businesses, the company aims to deliver a slate of video programming to millions of online viewers — at home and on the go. The addition of Time Warner movies, TV shows and pay-tv networks will boost AT&T’s annual revenue by as much as 20 percent, while increasing net debt by 58 percent to $180.4 billion.
AT&T’s Time Warner acquisition was a long time coming. The carrier announced the deal almost two years ago, but it was fought by antitrust enforcers. “It was clear back in 2016 when we actually did this deal that scale was important, and the distribution model was changing,” Chief Executive officer Randall Stephenson said on a call with investors after second-quarter results were announced.