AT&T Falls Shy on Earnings in First Quarter Since Time Warner Acquisition

Company meets revenue expectations in “Crazy Rich Asians” summer

Last Updated: October 24, 2018 @ 6:10 AM

AT&T fell shy of Wall Street’s earnings expectations in Q3 2018 — the company’s first full quarter with Time Warner’s assets under its sizable umbrella.

On Wednesday, AT&T reported 90 cents of earnings per share on $45.7 billion in revenue. Media analysts had forecast 94 cents of earnings on $45.65 billion in revenue, according to a Yahoo Finance poll.

With Time Warner on its financial statements, AT&T grew year over year revenue by 15.3 percent and operating income by 25.2 percent. Of course, expenses also increased.

AT&T’s wireless business is still its biggest segment, and that one saw 4.3 million total net adds this quarter. The publicly traded corporation’s satellite-TV wing DirecTV went the opposite way, posting 346,000 net loses in traditional video subs. DirecTV Now added 49,000 customers.

Turner and HBO experienced year over year subscription revenue growth, their new parent said. Warner Bros. TV licensing revenue grew in Q3 2018.

This summer, Warner Bros. released movies “Crazy Rich Asians,” “The Meg” and “The Nun.”

All in all, Randall Stephenson is “pleased.”

“I’m pleased with the progress we made on a number of fronts in the third quarter,” the AT&T chairman and CEO said in a statement accompanying this morning’s financials. “Our U.S. wireless business is growing and it’s the single biggest contributor to our earnings and cash flow. WarnerMedia was immediately accretive in its first full quarter, contributing 5 cents to EPS, and our free cash flow grew by double digits.

“We’ve accomplished all this while staying focused on managing our debt portfolio,” he continued. “We’re on track to get to the 2.5x debt-to-EBITDA range by year-end 2019. And as we’re nearing completion of our fiber build and making pricing moves on video, we’re laying the foundation for stabilizing our Entertainment Group profitability in 2019. Across the business, I like our momentum and feel confident that we’re on track to deliver on our plans.”

Shares of AT&T stock (T) closed Tuesday afternoon at $33.02, up 35 cents on the day. The U.S. stock markets reopen at 9:30 a.m. ET.

In June, AT&T closed its massive $85.4 billion acquisition of Time Warner, which brought CNN, HBO and Warner Bros. under the telecom company’s umbrella.

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