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AT&T: DirecTV Sub Adds Can't Offset U-verse Declines

26 Jan, 2016 By: Erik Gruenwedel

AT&T U-verse, the telecom’s pay-TV platform, remains on an orchestrated downward spiral.

The service lost 240,000 video subscribers in the fourth quarter (ended Dec. 31) compared to adding 73,000 subs during the previous-year period. Meanwhile, AT&T’s $49 billion acquisition, DirecTV, added 214,000 video subscribers in the quarter to end the period with 19.7 million. It added 149,000 subs during the previous-year period.

When combined, the entertainment group lost 26,000 video subscribers — underscoring management’s deliberate move away from U-verse and shift towards satellite. DirecTV has added subs every month since AT&T acquired it, which the telecom attributes to its wider footprint nationwide.

Globally, AT&T has 45 million video subscribers when including Sky Mexico.

“You’ll see that relationship [between U-verse and DirecTV] get better … because we are focused on the satellite product,” CEO Randall Stephenson said on the fiscal call.

"Our DirecTV integration is going well, and the customer response to our new integrated mobile and entertainment offers is strong. Throughout this year, we plan to launch a variety of new video entertainment packages [i.e. on-demand programming, binge-viewing, and increased stacking rights to episodic shows] that give customers even more choices."

The CEO said he remains energized about AT&T’s partnership with The Chernin Group with Otter Media, which is launching SVOD services driven by stakes in Fullscreen Media and Crunchyroll.

“That’s going well. Peter Chernin [former president at News Corp. when it controlled 20th Century Fox] is probably the best content talent on the planet,” Stephenson said, alluding to the telecom’s popular original MMA series “Kingdom.”

AT&T said it added 2.8 million wireless subscribers despite reporting a slight decline in revenue at $18.9 billion.

The telecom is melding satellite TV with wireless broadband and offering unlimited data plans to lure new subscribers — a marketing ploy that has thus far upped subscribers more than 60% since the third quarter. The company has had 500,000 subs sign up for the new unlimited data plan. AT&T plans to roll out additional video services later this year, including over-the-top offers the company says will be unique to the market place.

“This is only our first move,” Stephenson said on the fiscal call. “We think we are a company with no obvious peer.”

Indeed, AT&T hopes to make updated TV Everywhere options more attractive to subscribers, thereby reducing churn.

“Our goal is a TV Everywhere experience with broad viewer choice, both inside and outside the home, that is simple and easy for out customers to use,” CFO John Stephens said.

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