WASHINGTON (AP) — On a sharply divided Supreme Court, the justice in the middle seemed conflicted Tuesday in the court’s high-stakes consideration of a baker who refused to make a wedding cake for a same-sex couple in 2012. The court’s fault lines were laid bare in a riveting argument that focused equally on baker Jack […]
AT&T subscriber losses highlight cord-cutting threat: analysts
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 as well as the impact of the recent hurricanes. Shares were down 3 percent on Thursday morning.
“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. Shares of Dish Network Corp, Charter Communications Inc , Comcast Corp and Altice USA Inc fell in early trading.
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 losses were far more than last year’s subscriber loss of 3,000.
AT&T noted 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.
The company is not the only pay-TV provider to point to a more competitive environment. Cable company Comcast said in September it expected to lose up to 150,000 video subscribers in the third quarter, citing the same reasons as AT&T.
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. Niknam noted accelerating competition from Dish’s Sling service, Sony Corp’s PlayStation Vue and others.
(Reporting by Anjali Athavaley; Editing by Frances Kerry)
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