AT&T Chief Financial Officer John Stephens told attendees at an investor conference today that the company is “optimistic” that its video losses have peaked.
The company saw a net loss of over 1.7 million video subscribers in the third quarter of 2019, nearly double the 946,000 losses that the company saw in second quarter. The entire pay-TV industry had a difficult third quarter as more people cut the video cord, but AT&T’s losses were the most dramatic, representing 79% of the entire industry’s losses for the quarter.
AT&T Video Losses
According to Stephens, AT&T is now more focused on “long-term value opportunities” for video customers. He contrasted this with the company’s previous strategy of offering introductory prices that had to be increased after two years to cover content costs.
Key drivers for AT&T’s improved video business metrics, Stephens said, will include “the anniversary of this new intake approach to much more rational product offerings” and AT&T TV – the company’s over-the-top video offering that launched several months ago in select markets.
AT&T expects to make AT&T TV its lead video offering moving forward, as the company de-emphasizes satellite-delivered DirecTV and its home-grown U-verse IPTV offering. As Stephens noted, AT&T should gain cost efficiencies as it begins to eliminate the need to roll a truck to install a satellite dish, instead sending a self-installed device to customers using UPS.
He also pointed to opportunities to sell fiber-based broadband to end users as OTT video offerings drive the need for faster broadband. Fiber broadband from AT&T is now available to 14 million locations, but only 4 million of those locations are current subscribers, suggesting considerable upside for AT&T.
It’s worth noting that AT&T may not be able to replace DirecTV with AT&T TV in some areas because the broadband connection may not be fast enough to support both services. It’s also worth noting that at least one financial analyst has questioned whether end customers really see benefits to OTT offerings that essentially are just a new delivery method for traditional pay-TV content.
Nevertheless, Stephens said, “We’re committed to making this work.”
Stephens made his comments at the UBS Global TMT Conference, which was also webcast.