AT&T Meets Q2 Earnings Mark as WarnerMedia Growth Offsets TV Subscriber Losses

New HBO and Turner owner tops revenue forecast despite shedding 778,000 DirecTV and U-verse customers


WarnerMedia parent AT&T had a solid second quarter of 2019 — except for notable subscriber losses at DirecTV and U-verse.

Wall Street had expected AT&T to post earnings per share (EPS) of 89 cents on $44.85 billion in revenue, according to a Yahoo Finance consensus estimate. AT&T reported exactly that 89 cents of EPS. Consolidated revenue was $45 billion even.

Those adjusted earnings were down two pennies per share versus the comparable quarter last year. Thanks to the mid-2018 Time Warner addition, revenues rose 15.3% and operating income jumped $1 billion.

In the entertainment segment alone, the primary concern for us, AT&T’s operating income increased 2.6% from Q2 2018. DirecTV and U-verse combined for a net loss of 778,000 premium-TV subs this quarter. DirecTV Now shed another 168,000 subscribers.

Last Q2, AT&T closed its $85 billion acquisition of Time Warner, bringing HBO, Turner and studio Warner Bros. under its sizable umbrella, and creating WarnerMedia. Next year WarnerMedia will unveil streaming platform HBO Max.

“We’re halfway through the year and on track to deliver on all our 2019 priorities,” Randall Stephenson, AT&T chairman and CEO, said in a prepared statement accompanying the Q2 financials. “We continue to pay down debt and are more confident than ever that we’ll meet our yearend deleveraging goal, and we’ll take a look at buying back stock. Our FirstNet build is not only running ahead of schedule — it’s become a driver of our wireless network leadership in speed, reliability and network performance. It also sets us up to have nationwide commercially available 5G coverage in the first half of 2020.”

“On top of all this, our operating teams continue to deliver solid results,” he continued. “Our wireless business grew revenues, profitability and phone customers, both postpaid and prepaid. WarnerMedia delivered another strong quarter with both revenue and operating income growth. And our Entertainment Group profitability continued to stabilize, and even grow. Across the board, it was a solid quarter that puts us in position to have a really strong year.”

Shares of AT&T stock (T) closed Tuesday at $32.09, down a few pennies per share from the prior day. The U.S. stock markets reopen at 9:30 a.m.

AT&T executives will host a conference call at 8:30 a.m. ET to discuss the quarter in greater detail.