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.
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.