AT&T is hemorrhaging TV subscribers at a faster rate than its competitors, as cord-cutting hits the pay-TV industry hard (T)


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  • US pay-TV subscriber losses have mounted over the past two quarters, in large part because of AT&T. 
  • The telecom, which is overhauling its TV businesses, lost nearly 1.6 million net video subscribers in the first six months of 2019. 
  • Cord-cutting also accelerated year-over-year at cable companies like Comcast and Charter.
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Pay-TV companies are having a terrible 2019 with two quarters in a row of mounting subscriber losses that were among the worst on record.

And AT&T is at the center of the subscriber exodus.

The telecom company, which is overhauling its pay-TV strategy, lost nearly 1.6 million net video subscribers in the first six months of the year across its four satellite- and internet-TV services, the company revealed when it reported earnings for the second quarter on July 24.

Nearly 950,000 net video subscribers abandoned AT&T during the second quarter alone — in stark contrast to 2018 when the company gained 80,000 video subscribers during the period.

Wall Street research firm Credit Suisse projected in June that the pace of cord-cutting across the industry would reach -2.6% year-over-year for the full year of 2019. That’s down from a pace of around -1% during the last four years, as traditional TV services like AT&T lost more subscribers but streaming-TV bundles like Hulu Live and YouTube TV gained.

Read more: AT&T was mostly to blame for pay TV’s bleak quarter, and analysts say the rest of 2019 looks even worse

The trouble at AT&T

AT&T had braced investors for more subscriber losses as it pulled back on the discounts it had been using to attract customers, and focused instead on making its video businesses profitable. The company hiked prices and slashed channels at its streaming-TV service DirecTV Now in March. On the satellite side, it wound down a two-year price lock promotion, which about 1 million customers remained on as of last quarter.

AT&T plans to start testing in the third quarter an internet-based alternative to its satellite service — which will be called AT&T TV — in an effort to lure back and hold onto TV customers. It’s rebranding DirecTV Now as AT&T TV Now, ahead of the launch.

How AT&T’s competitors fared

While subscriber losses were worst at AT&T, cord-cutting also accelerated at cable competitors including Comcast and Charter, adding to the trend. Comcast lost 224,000 pay-TV subscribers, down from 140,000 a year ago. Charter lost 141,000 subscribers, compared to 57,000 in the second quarter of 2018.

Satellite- and streaming-TV provider Dish Network, meanwhile, was as close to a bright spot as the pay-TV industry has yet to see during the second quarter.

Subscriber losses at Dish eased year-over-year to 31,000, from 151,000 during the second quarter of 2018, as gains at Sling TV offset some of the satellite losses. This was in spite of a carriage dispute with AT&T’s WarnerMedia that has left HBO dark on the service since late last year.

Major US pay-TV companies Verizon and Altice are due to report later this week.

The big picture

The rise in cord-cutting comes as legacy media brands including WarnerMedia and Disney prepare to launch subscription services in the US, creating more alternatives to traditional TV services.

Read more: A top Comcast exec on how the TV bundle could be fundamentally changed by new streaming services like Disney Plus and HBO Max

Satellite-TV providers including Dish Network and AT&T’s DirecTV have been the hardest hit by cord-cutting in recent months, as people shift to cheaper and more flexible TV packages. 

Read more: A merger between satellite-TV giants Dish and DirecTV could save around $2 billion a year, and Wall Street analysts say the deal could finally happen

Unlike with satellite, most cable companies also have sizeable broadband businesses, which allow them to hold onto to certain customers who ditch traditional TV services. 

With people in the US fleeing traditional TV services by the hundreds of thousands each quarter, every TV provider is trying to diversify its business.

AT&T still hit earnings targets during the second quarter with the help of recently acquired subsidiary WarnerMedia. Comcast got a boost from its Sky subsidiary and continued to grow internet subscribers. And Dish set itself up last week to make a big entrance into the wireless sector, following a deal with T-Mobile and Sprint. 

SEE ALSO: A Comcast exec explains the company’s ‘surgical’ strategy for stemming TV subscriber losses by selling on experience rather than price

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