Financial Performance

AT&T Takes $15B Writedown on Ailing DirecTV

The writedown of the premium TV business reflects "years of cord-cutting as viewers move to cheaper online streaming services."
Matthew HellerJanuary 27, 2021

AT&T said Wednesday it had taken a $15.5 billion writedown on its ailing DirectTV business, overshadowing growth in its HBO Max streaming and core wireless services.

The disclosure of the writedown came as AT&T reported that it lost another 617,000 premium TV subscribers in the fourth quarter, highlighting the continuing plight of DirectTV amid the shift away from traditional pay TV to streaming.

AT&T now has 16.5 million premium TV customers, down from more than 25 million in early 2017.

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The company attributed the writedown to “competition, lower gross adds from the continued focus on adding higher value customers, and a programming dispute, partially offset by lower churn.” But Reuters said it reflected “the impact of years of cord-cutting in the industry as viewers move to cheaper online streaming services.”

The writedown helped push AT&T into a fourth-quarter net loss of $13.88 billion, or $1.95 per share. Total operating revenue was $45.69 billion, beating analysts’ estimates of $44.56 billion.

“We ended the year with strong momentum in our market focus areas of broadband connectivity and software-based entertainment,” CEO John Stankey said in a news release. “By investing in our high-quality wireless customer base, we had our best full-year of postpaid phone net adds in a decade and our second lowest postpaid phone churn ever.”

During the fourth quarter, AT&T added 800,000 net new phone subscribers who pay a monthly bill, beating analyst expectations of 475,300 adds. HBO Max ended 2020 with 17 million activated accounts but revenue from the WarnerMedia division fell 9.5% as the show-business side continued to wrestle with low box-office revenue and weak advertising revenue.

“Our biggest and single-most important bet is HBO Max,” Stankey told analysts on an on earnings call. Executives plan to expand the service’s footprint in other countries this year and launch an advertising-supported version in the second quarter.

According to The Wall Street Journal, AT&T has been trying to unload DirecTV, holding discussions with suitors including private-equity firm TPG. A deal “could allow AT&T to deconsolidate DirecTV’s worsening financial results while retaining a stake in the TV company,” the Journal said.