AT&T CFO John Stephens said he expects to company to lose “300,000 to 350,000” more video subscribers in Q3 than the company shed in the second quarter of 2019. Considering AT&T lost a combined 946,000 cable, satellite and streaming customers in Q2, the math would forecast a third quarter decline of 1.246 million to 1.296 million net losses at the company’s premium video group.
The company also expects WarnerMedia’s revenues to decline $400 million in Q3 when compared with the same quarter last year. That’s mostly a result of the 2018 quarter’s box office being much better then this one.
A year ago, “Crazy Rich Asians,” “The Meg” and “The Nun” were out in theaters.
Stephens first gave the guidance at Wednesday’s Bank of America Merrill Lynch conference, where he was a keynote speaker. AT&T then released supplemental material online, including the below paragraphs. The bolding is ours.
AT&T expects some trends to affect consolidated revenues in the third quarter of 2019: lower wireless equipment revenues driven by continued low upgrade rates, but with no impact on margins; a tough comparison to a number of second-half 2018 hit movies at Warner Bros., which the company expects to lower WarnerMedia revenues by about $400 million, but with no overall impact to the company’s 2019 EPS guidance; and continued adverse foreign exchange impacts in Latin America, but with offsetting effects on operating expenses.
In its Entertainment Group, the company continued to execute on its deliberate strategy to manage costs and focus on high-value customers to stabilize EG EBITDA. Coming into the year, the company expected some tough content negotiations, specifically for retransmission deals. Stephens said the company has been holding a hard line in negotiations, which is allowing it to achieve its content cost management goals. In the third quarter, Stephens said the company expects an incremental 300,000 to 350,000 premium video losses above the previous quarter’s premium video results, driven by: aggressively managing costs with retransmission negotiations, some of which resulted in content provider black outs; and from limiting promotional pricing.
AT&T will report its third-quarter 2019 financials on Oct. 23.
AT&T stock (T) is currently trading down almost 2%, which is a decline of less than a buck per share.
See a snapshot below.