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AT&T logged a hefty $15.5 billion charge on its flailing DirecTV unit, which has been pummeled by cord-cutting even as the company’s new streaming service HBO Max continues to grow.
The telecom giant said Wednesday that the writedown spurred a fourth-quarter loss as the firm signaled it would focus on streaming and move away from traditional pay TV. AT&T reported quarterly revenue declines in DirecTV and WarnerMedia units, offsetting growth in its core wireless phone business.
AT&T has been trying to unload DirecTV since last year. But as previously reported by The Post, it has been unhappy with the offers it has received.
More recently, the company has been in talks with private-equity firm TPG, which valued the video business at more than $15 billion including debt, according to reports. But, the fourth-quarter write-down reflects how the business has changed since AT&T bought DirecTV in 2015 for $49 billion.
Revenue at AT&T’s video unit, which includes DirecTV, fell 11 percent to just over $7 billion in the fourth quarter. DirecTV and AT&T TV had a net loss of 617,000 subscribers. The business ended the year with 17 million domestic video connections, down 16 percent from a year ago.
Nonetheless, AT&T’s wireless business, which generates more than half of the company’s profits, continues to be a bright spot for the company. During the quarter, AT&T posted a net gain of 800,000 postpaid phone subscribers and 1.5 million for the full year, the telco’s highest annual total since 2011.
For 2021, AT&T anticipates revenue growth of about 1 percent as well as “stable adjusted earnings per share.” The company expects lower revenue from the “continued partial closure of movie theaters” and “higher costs” based on its decision to distribute films in 2021 on HBO Max concurrently with theaters.
Overall, AT&T posted a fourth-quarter loss of $13.9 billion, or $1.95 a share, versus a year-ago profit of $2.4 billion, or 33 cents a share. Revenue fell over 2 percent to $45.7 billion.
The coronavirus pandemic has hammered AT&T, not only weakening advertising revenue at cable networks like CNN and TBS, but also causing movie theaters that show its Warner Bros. films to close.
While some studios are pushing back their biggest films to debut after the pandemic, AT&T decided to concurrently stream its full slate of 2021 movies, such as the “Dune” reboot and “The Matrix 4,” on HBO Max for one month after they premiere in cinemas. The strategy is meant to build up subscriber numbers at HBO Max, but it will also squeeze the company’s theatrical revenue.
During the last three months of the year, revenue from WarnerMedia, the firm’s media and entertainment division, fell 10 percent to $8.5 billion, due mainly to low-box office revenue and weak advertising sales. The HBO business grew and ended the year with nearly 42 million US subscribers, a number that includes older cable plans as well as sign ups for the new streaming service.
HBO Max ended the year with 17 million activated accounts, which dwarfs big-time players, such as Netflix, which has more than 200 million subscribers globally.
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