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AT&T’s new video streaming service, DirecTV Now, boosts quarterly results

An AT&T store in New York in October.
An AT&T store in New York in October.
(Kena Betancur / AFP /Getty Images)

AT&T said Wednesday that it has attracted more than 200,000 customers for its recently launched video streaming service, DirecTV Now, as the television industry races to keep up with dramatic changes in consumer behavior.

Dallas-based AT&T is the nation’s second-largest phone company and the largest pay-TV business with more than 25 million TV customers. Wall Street closely monitors subscriber counts to glean insights on the health of the industry.

During the October-December quarter, the telecommunications giant had a net loss of about 27,000 traditional television subscribers, as its U-Verse service continued to lose ground.

However, El Segundo-based DirecTV, the satellite-TV service that AT&T acquired in 2015, showed growth and helped the company maintain its overall customer base.

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The new streaming service was another bright spot. AT&T launched DirecTV Now in late November with a teaser rate of $35 a month in an effort to compete with Dish Network’s Sling TV, Hulu and other streaming services that are competing with the traditional pay-TV business. Though the service was instantly popular, some customers complained about outages.

AT&T Chief Financial Officer John J. Stephens acknowledged the glitches during a call with analysts. “It’s still early and we are working through the challenges,” Stephens said.

Most of the new customers live in urban centers, Stephens said. “They’re younger and they are apartment-dwellers. We think it’s a real opportunity.”

Overall, the quarterly results met Wall Street’s expectations. AT&T reported net income in the fourth quarter of $2.4 billion, or 39 cents a share, compared with $4 billion, or 65 cents, in the year-ago quarter. Revenue came in at $41.8 billion, down slightly from $42.1 billion a year ago.

The company said its cellphone business remained strong, with a net addition of 2.8 million wireless customers in the quarter.

AT&T has incurred higher costs as it upgrades its phone networks.

During the quarter, AT&T unveiled its proposed $85.4-billion takeover of media company Time Warner Inc., which owns such prominent properties as HBO, CNN, TBS, TNT, Cartoon Network and the Warner Bros. TV and film studio in Burbank.

“We launched DirecTV Now. Our 5G evolution plans and improved spectrum position are paving the way for the next generation of super-fast mobile and fixed networks,” Chief Executive Randall Stephenson said in a statement. “And we shook up the industry with our landscape-changing deal to acquire Time Warner, the logical next step in our strategy to bring together world-class content with best-in-class distribution which will drive innovation and more choice for consumers.”

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Some analysts believe that the Time Warner deal should clear the regulatory review process because President Trump has signaled that he intends to have a more business-friendly approach.

AT&T shares closed Wednesday at $41.39, up 3 cents. The results were reported after the markets closed.

meg.james@latimes.com

@MegJamesLAT

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