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AT&T Tops Q4 Earnings Mark, Whiffs on Revenue With $1.2 Billion Investment in HBO Max

WarnerMedia Entertainment parent falls below 20 million premium-TV subscribers

AT&T can thank its lucky stars — and adjustments related to the Time Warner acquisition — for topping fourth-quarter 2019 earnings. Unfortunately for shareholders, a giant investment in upcoming streaming service HBO Max made the parent company miss on revenue estimates.

And then there is that whole cord-cutting issue.

But first: Wall Street had forecast earnings per share (EPS) of 87 cents on $46.96 billion in revenue, according to a Yahoo Finance-compiled consensus. AT&T reported adjusted EPS of 89 cents on $46.8 billion in revenue.

Without a big investment in HBO Max, that Q4 revenue would have been $48 billion, AT&T said. Takes money to make money, we suppose.

In the fourth quarter, AT&T’s mobile services revenue and operating income increased.

But the entertainment group shed video subs again, losing 945,000 premium-TV subscribers and 219,000 AT&T Now customers. The decline was pretty much exactly the same last quarter.

For WarnerMedia Entertainment, Turner revenues rose 1.6% and HBO’s grew 1.9%. Home Box Office added digital subscribers.

For 2019 in totality, AT&T’s revenue rose. Much like the fourth quarter alone, with key adjustments related to the Time Warner merger, AT&T’s earnings increased.

That’s what AT&T Chairman and CEO Randall Stephenson focused on in his prepared statement accompanying the financials.

“We delivered what we promised in 2019 and we begin this year with strong momentum in wireless, with HBO Max set to launch in May and our share retirement plan well underway,” he said. “Our 2020 outlook positions us to deliver meaningful progress on our 3-year financial and capital allocation plans as we continue to invest in growth opportunities and create value for our owners, as we did last year.”

Shares of AT&T stock (T) closed Tuesday afternoon at $38.58 apiece. The U.S. stock markets will reopen for their regular trading day at 9:30 a.m. ET today. In premarket trading, AT&T stock is currently down a few dimes.

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

WarnerMedia’s streaming service HBO Max will launch in May and cost $14.99 a month.