AT&T narrowly missed fourth quarter revenue estimates after reporting Wednesday morning it lost more than 250,000 DirecTV Now customers and posted underwhelming wireless growth.
The telecom and media giant’s $0.86 earnings per share met analyst estimates, but its $47.99 billion in revenue — a 15 percent year-over-year increase — fell about $500 million short of Wall Street projections.
Most glaringly from an entertainment standpoint, DirecTV Now, the company’s $40 per month streaming option, lost 267,000 subscribers, while DirecTV lost slightly more than 400,000 satellite customers during Q4. AT&T dropped 700,000 total video subscribers by the end of 2018, hitting 24.5 million customers overall; DirecTV Now had 1.6 million subscribers to close the year after starting 2018 with 1.86 million subscribers.
The record DirecTV losses were offset by WarnerMedia’s strong performance, with the entertainment wing bringing in $9.2 billion in revenue, a 5.9 percent increase year-over-year increase. Warner Bros. contributed $4.5 billion to WarnerMedia’s overall sales, while Turner added $3.2 billion and HBO brought in $1.7 billion in revenue. The company, in its investor briefing, said big box office performances from “A Star Is Born” and “Aquaman” helped drive increased revenue for Warner Bros during the fourth quarter. HBO subscription revenue decreased 3 percent during Q4 amid a carriage dispute with Dish.
WarnerMedia, led by John Stanke, is preparing to launch its own streaming service later this year.
“Our top priority for 2018 and 2019 is reducing our debt and I couldn’t be more pleased with how we closed the year. In 2018, we generated record free cash flow while investing at near-record levels,” AT&T chief Randall Stephenson said in a statement accompanying earnings. The company held $166.25 billion in long-term debt at the end of 2018, with much of that stemming from its acquisition of Time Warner.
AT&T shares fell about 3 percent to $29.72 per share before markets opened on Wednesday.
As for wireless, AT&T added 134,000 new customers, falling about 65,000 short of analyst estimates.
AT&T will hold a call to discuss its earnings at 8:30 a.m. ET.