AT&T subscriber losses highlight cord-cutting threat: analysts

FILE PHOTO: An AT&T logo is seen at a AT&T building in New York City
FILE PHOTO: An AT&T logo is seen at a AT&T building in New York City, October 23, 2016. REUTERS/Stephanie Keith/File Photo

October 12, 2017

By Anjali Athavaley

NEW YORK (Reuters) – AT&T Inc’s third-quarter video losses sent pay-TV industry shares down on Thursday after Wall Street analysts raised concerns about the continued threat of consumers cancelling their cable and satellite television subscriptions.

The No. 2 U.S. wireless carrier, which owns satellite television service DirecTV, said in a filing on Wednesday that it lost 90,000 U.S. video subscribers in the quarter due to intense competition in traditional pay TV markets and the impact of the recent hurricanes. Shares were down 3.8 percent to $36.74 midday on Thursday.

“It should be clear that DirecTV, like all of its cable peers, is suffering from the ravages of cord-cutting,” said Craig Moffett, analyst at MoffettNathanson, in an email. “It is reasonable to expect a weak quarter for the whole pay-TV industry.”

The announcement weighed on other stocks in the sector, with shares of Dish Network Corp, Charter Communications Inc, Comcast Corp and Altice USA Inc trading lower.

AT&T said it added roughly 300,000 subscribers to DirecTV Now, its cheaper option for customers who want to stream television over the internet. That means the company lost 390,000 subscribers to its satellite and U-verse services, who are considered to be higher-value customers.

“Linear video erosion is worsening, with better (streaming) growth the silver lining,” wrote Deutsche Bank analyst Matthew Niknam in a research note, adding that the loss was wider than his estimate of 266,000 and far more than last year’s subscriber loss of 3,000.

AT&T said in its filing that the decline of traditional video subscribers will negatively impact its entertainment group revenue and margins.

The company is expected to report earnings on Oct. 24.

AT&T is not the only pay-TV provider to point to a more competitive environment. Cable company Comcast Corp said in September it expected to lose up to 150,000 video subscribers in the third quarter, citing the same reasons.

The losses come after more options have entered the market that allow consumers to stream television over the internet at a cheaper price than paying for cable. Deutsche Bank’s Niknam noted accelerating competition from Dish’s Sling service, Sony Corp’s PlayStation Vue and others.

(Reporting by Anjali Athavaley; Editing by Frances Kerry and Meredith Mazzilli)

  • Politically Incorrect

    I cut the cord last year. I don’t miss it at all.

  • Michael Durkin

    In my opinion, the cable companies are not reading the consumer properly. We want to be able to choose which channels our money supports. I, for one, do not like the idea that my money would subsidize channels and networks that I do not support. So, yeah, I am one of those people that cut the cord. I am very open in explaining why, it should not be hard to figure out.

  • Robert Adams

    Do not subscribe to DirecTV in the subtropics. It takes just a small dark cloud to interrupt service. AT&T needs to address this problem. From Mid July through Sept on a daily basis it is not uncommon to lose picture. In cases of natural disasters (hurricanes, etc. this can be crucial Not everyone has a weather radio since we rely on TV alerts.)

  • fatboy46

    DISH/ DIRECT has LOW tech equipment… and about 25 ‘shopping- get rid of your sagging underarms- and buy our junk channels, that are repeated about 4 times throughout your 200 channel package- so if 100 channels are junk- what are you getting for your money? Uverse is slower but better technology.. 4 channels to record vs 2 with the dish folks…at the lower levels- you are better off with streaming TV than Dish- plus- clouds and storms don’t shut you down or pixelate all the time.

  • mtmountainman

    Been running a Kodi Media Center box for over a year. You literally couldn’t pay me to go back to Dish. My package with Dish $75 with my Kodi box $0. I already had high speed internet at home anyway, so that cost was already baked in. But my viewing choices are saving $75/month and I’m not missing out on anything I want to watch.

  • RMCS Ret.

    I gave up TV several years ago, Don’t watch any of it. If the wife dies so will my subscription to Dish Network. I don’t know what she watches and don’t really care, it’s all drivel to me.

  • Melissa McShane

    I’m tired of paying a fortune for the same anti-Trump mantra! You can’t watch anything without someone trying to get their 15 mins. of anti-Trump-elebrity!

    • CrocSmile

      You haven’t seen the media in New Zealand yet, the one online newspaper called Stuff .co .nz goes out of it’s way to post anti-Trump artlcles on a daily basis. The TV stations are no better, a bunch of opinionated low-brow closet commies who are worse than your snow flakes.

  • Mariner

    I cut off Comcast after downgrading the service and receiving two months of bills charging me for a service I no longer had. I paid them only for the new service yet they billed me late charges for the unpaid balance, which I never owed. They refused to discuss the matter with me and told me to read my bill.

    Filed an FCC complaint. Someone called me and at the end of the call Comcast owed me money. Beware of their prorating scam when you downgrade or upgrade, it will never work to your advantage, you will always owe them more.

    AT&T wired my place for fiber optic. Engineers told me everything was “hot” and I could subscribe immediately. So I called AT&T and subscribed to fiber optic service. I cancelled my Comcast account and turned in my equipment in advance of a tech installing the service 5 days later.

    He shows up the service is not completely available as another section of my community is being wired. That’s 4 blocks away. You would think they would make service available as each section was done as they connections are ready to go. It was then I found out the salesperson sold me the u-verse and dish. I cancelled my order and account

    A week later they were still calling me for an install time.

    I have internet service restored and bought the new Amazon Fire TV device yesterday. I’m done with cable providers. Overbilling, bad customer service and poorly educated customer reps who don’t know anything about the service they are representing.

    As I live in a hurricane prone zone the FCC should require cable operators to make limited and basic cable services carrying local news and weather on a free basis. Let the local broadcasters boost their signals as well so an external HDTV antenna can receive them

  • RealHOPE17

    People are tired of propaganda in everything, including the commercials!

    • Pamela

      YES!!!

  • Jesse

    Have you ever tried to call AT&T for help or assistance? The number of times you will be transferred is probably 4-5 on average and each person anwsering doesn’t care 1 iota about you. It’s a sinking Titanic.

  • Casey Wallace

    I just did this because I wasn’t threatening. It’s easy to cut the cord when everything on TV goes against your morals

  • InAtlanta

    I wonder if it has anything to do with the fact that network TV is garbage (Blackish!), fake news from the media outlets (CNN, MSNBC, NYT, etc) are all lies and the cable industry has grossly overpriced their services……..ya think????
    Let’s use our vast financial resources and refuse to finance the socialist agendas of all the left wing snowflakes….it works! The NFL and their ilk are folding like a cheap suit (good analogy, no?)
    BOYCOTT THE LEFT
    BOYCOTT THE LEFT
    BOYCOTT THE LEFT
    BOYCOTT THE LEFT
    BOYCOTT THE LEFT

  • rgeiken

    I have You Tube Red, Netflix and Amazon Video which is about a $35 a month cost versus Direct TV at $110 a month. I am the only person living here, so I get to set the budgets. Direct TV is history in my house.

    I watch all 3 of my streaming services every day while I got to the point of not wanting to watch anything on my pay TV. You can pick and choose what you want to watch rather than what someone else has decided to give you. It will be interesting to see where pay TV services are in another 10 to 15 years. They seem to be going in the same direction as Mall in this country. Malls are failing by the dozens all over the country. Not a new Mall has been built since about 2004. People change and business has be able to keep up, or they will go the way of Montgomery Ward, Sears and K Mart.

    • Pamela

      I went with open air antenna, SlingTV, Netflix, and Amazon Prime (because I get a lot of shipments anyway). Runs me about $36 a month too. Although, with Netflix’s habit of raising prices, might get rid of them soon too.

      I just wish that I could dump Comcast/Xfinity for the internet. First time a fiber service comes to League City, TX, I ditch Comcast in a heartbeat.

      • rgeiken

        I can find all I want to watch on my 3 streaming services. After 5 or 10 seasons, shows can be tiresome to watch. I had Direct TV for over 2 years, and while the service was good, I got tired of what was on there. I like You Tube in the morning for all kinds of things. That is actually my source for things that I want to watch and not what somebody else thinks that I should. Watch Netflix and Amazon in the Afternoon and Evening. Being retired, there is not actual work day for me. I have worked hard and spent lots of years going to school while working and now it is my time and I get to make all the decisions, and getting off cable was one of them.

        I spend more time on my computer lately too. I have watched a lot of you tube videos that have helped me doing things and make decisions and appreciate that. I want to make some you tube videos that show how I use the computer and the programs that I use. Most of them are free and lots of them accomplish things that I enjoy doing.

  • phasegen

    Cable and Satellite have to change their business model or face going away. Their cheese has been moved. The advent of services like Netflix and Hulu allow people to filter out what they don’t want, and pay a lower price doing it. I cut the cord three years ago, and I can’t go back. I’d rather do without tv altogether. If I want news, the computer is where I go. As an English speaking, straight, caucasian male that doesn’t like football, soccer, basketball, or hockey, I don’t want to pay for channels that have nothing to do with me and who I am. Channels like ESPN, Oxygen, Logo, BET, and all the Latino and Christian channels are out. Jimmy Swaggart isn’t allowed in my house. Neither is Rosie ‘Donnell and Bill Nye. There are a lot of people like me, and a lot of people who should be. You dopes know who you are. The ones old enough to remember when cable first came out, and what the major incentive was to pay for tv. It wasn’t bodacious tah-tahs. It was No Commercials. Now you’re paying to watch more commercials than ever before. They should be paying you for that.

  • Harry Wheeler

    To make up for the losses at&t upped my phone bill at least $2.00 this year so far. I suspect they, most likely, did it to every one. So that’s an extra $100M+ at least, plus the taxes, fees, and sur charges they have generated for cities and states across the US. And, oh, watch for double charges for the same things on your phone bill. They are pretty sneaky.

  • gregg56

    When AT&T acquired DirecTV, my rates went up something like $30 per month. I imagine that pushed people toward cord cutting faster than anything else. I am still running the old NTSC style box, so when they want me to upgrade, AT&T wants to add another $36/month to my bill. I bought a Kodi box for the price of one month of DirecTV HD. Still making the choices among an incredibly wide variety of services, but I need to hold onto the DirecTV until I get the streamer fully set up and the family accustomed to it.

    • Mariner

      When Comcast bought NBC everybody’s rates went crazy and haven’t stop going up. And I’m tired of paying an additional sports fee of $7.00 to ESPN which is in my package even though I don’t watch it. Should be permitted to cut ESPN out. Not to mention I have approx. $20 a month in local taxes on my cable bill. It’s out of control

  • Erdnay

    I’ll keep Direct TV so I can keep getting OANN.

    • gregg56

      OANN is available on Klowd TV.

    • jean

      And uverse channel 208

      • Jesse

        Or 1208 if you prefer HD 🙂

  • jenshadus

    The streaming video is expensive and most of the shows are garbage.

    • Allen Finch

      I think you need to take a deeper look at streaming!!! I save over $50.00 per month with Hulu Live TV and actually have channels I prefer to watch with more available features!!!

    • gregg56

      You are, obviously, not watching the same channels that I am. My recurring costs today are less than 10.00/month.

      • Mariner

        my Comcast bill was $225 a month., No more.

      • jenshadus

        How’d you do that. Just for internet access I pay $100 a month to get into Hulu, Netflix and busy, all of which cost extra

        • gregg56

          I work from home at times and need a beefy Internet connection. Since that is already a sunk cost, I do not count it in my calculations because with or without streamers, I would have to pay the same bill!

      • jenshadus

        Gregg. Still don’t know how u only pay $10 a month for the internet connection itself.

    • phasegen

      If you have a decent internet connection, Netflix is $13 a month. Hulu is $13 a month also. That’s $26 a month plus the internet connection you are already paying for anyway. No DVR required. If you can’t afford that, then how can you afford cable or Directv?

    • Pamela

      I went from $159 a month cable and internet to $81 a month internet, SlingTV, Netflix, and I have access to Amazon Prime stuff free since I get a lot of shipments from them anyway.