AT&T Forecasts Losing 1.1 Million Cable TV Customers in Third Quarter

TV static
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AT&T is expecting to lose over 1 million TV subscribers in the third quarter of this year, amid increased competition from online streaming services. Meanwhile, AT&T’s shareholders are telling the company that buying DirecTV was a big mistake.

AT&T forecasts that it will lose roughly 1.1 million TV subscribers in the third quarter of 2019 while the company faces pressure from an investment group insisting that AT&T’s prioritization of the TV business was a huge mistake, according to a report by Ars Technica.

The company’s CFO, John Stephens, told shareholders that AT&T “expects an incremental 300,000 to 350,000 premium video losses above the previous quarter’s premium video results,” according to a statement released by AT&T on Wednesday.

The customer losses, the company added in its statement, have been driven by “aggressively managing costs with retransmission negotiations, some of which resulted in content provider blackouts; and from limiting promotional pricing.”

AT&T maintains that it has been “holding a hard line in negotiations” with regards to content cost management, but the consequential “blackouts” of channels have been driving customers away.

Last quarter, the company reported “a net loss of 778,000 subscribers in the ‘Premium TV’ category, which includes its DirecTV satellite and U-verse wireline TV services,” notes Ars Technica, adding that AT&T’s subscriber-loss forecast “suggests the Q3 loss in the category will be between 1,078,000 and 1,128,000 subscribers.”

The report added that an AT&T spokesperson confirmed that projected loss.

AT&T is hoping to set the course in the right direction in 2020, stating that the company “expects premium TV subscriber trends to improve due to far fewer customers on promotional pricing and the nationwide launch of AT&T TV.”

Not everyone, however, agrees with AT&T’s new strategy.

“Unfortunately, it has become clear that AT&T acquired DirecTV at the absolute peak of the linear TV market,” said one of the company’s investors — Elliott Management Corp — in an open letter. The investor reportedly has a $3.2 billion stake in AT&T.

“When the transaction was announced, the pay TV ecosystem has been under immense pressure since the deal closed,” said Elliott Management. “In fact, trends are continuing to erode, with AT&T’s premium TV subscribers in rapid decline as the industry, particularly satellite, struggles mightily.”

“Despite nearly 600 days passing between signing and closing (and more than a year passing since), AT&T has yet to articulate a clear strategic rationale for why AT&T needs to own Time Warner,” continued the investor of the company’s Time Warner purchase.

“We think that, after $109 billion [the cost of Time Warner] and three years, we should be seeing some manifestations of the clear strategic benefits by now,” said Elliott Management.

The investor went on to call for “significant operational improvements,” asking, “does AT&T have the right mix of leadership at the Company?”

 

You can follow Alana Mastrangelo on Twitter at @ARmastrangelo and on Instagram.

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