AT&T Inc.
T -0.92%
set aside a $ 15.5 billion charge to its pay-TV business, reflecting the damage the cord cut has caused to its DirecTV satellite unit, even as HBO’s broadcast service grows Max of the company was rising.
The decline generated a fourth-quarter loss as the media and telecommunications giant weighs in on the possible sale of its pay-TV assets and executives are focusing their investments on newer technologies. The company reported quarterly revenue drops to its video units and WarnerMedia, which offset the gains in its main cordless phone division.
Executives called the cashless accounting charge a sign of the aging state of the pay-TV unit, as the Dallas-based company promotes an Internet streaming model that gives its viewers a direct line of content production. .
“Our biggest and most important bet is HBO Max,” Executive President John Stankey said Wednesday. Executives plan to expand the service’s footprint in other countries this year and launch an advertising version compatible with the second quarter.
Overall, AT&T reported a fourth-quarter loss of $ 13.89 million, or $ 1.95 per share, compared to a profit of $ 2,399 million, or 33 cents per share, a year earlier. Revenue fell 2.4% to $ 45.7 billion.
The coronavirus pandemic has strained the company, pressuring revenue from cable networks such as CNN and TBS throughout the year and closing many of the cinemas showing its Warner Bros. films. These setbacks hid recent gains in the company’s wireless service, which still generates more than half of the company’s profits.
The last three months of the year gave AT&T a net profit of 800,000 postpaid phone subscribers, a metric closely monitored by Wall Street. Rivals Verizon Communications Inc.
and T-Mobile US Inc.
reported net gains of 279,000 and 824,000 such connections, respectively.
AT&T’s WarnerMedia division revenue fell 9.5% to $ 8.5 billion as the entertainment industry continued to struggle with low box office revenue and weak advertising revenue. HBO’s business grew and ended the year approaching 42 million U.S. subscribers, a figure that includes old cable plans as well as new online service.
AT & T’s media division surprised Hollywood last year with a plan to release all of Warner Bros. ‘2021 HBO Max movies the same day they hit theaters. Executives said the measure would help the business deal with audiences who are reluctant to visit cinemas during a pandemic, while also providing an additional service to the studio’s sister transmission service.
The online-only HBO Max service ended the year with 17 million accounts activated. It is not yet a year old, but it competes in a busy global streaming video market on Netflix Inc.
it has already overshadowed more than 200 million subscribers worldwide and Walt Disney Co.
Disney + reached nearly 87 million subscribers in December.
Revenue from AT & T’s traditional video unit, which includes U-verse and DirecTV services, fell 11% to $ 7.2 billion in the fourth quarter. The business ended the year with 17.2 million national connections, up from 20.4 million at the end of 2019.
AT&T has held discussions on agreements with plaintiffs, including private equity firm TPG, which valued the video business at more than $ 15 billion, including debt. The fourth-quarter reduction reflects how the business has changed since AT&T bought DirecTV in 2015 for $ 49 billion, or $ 66 billion including debt.
The Wall Street Journal reported in August that AT&T had taken advantage of bankers to explore a deal to withdraw its books from the rapidly shrinking business. The transaction could allow AT&T to deconsolidate the worsening of DirecTV’s financial results while maintaining a stake in the television company.
Video losses have weighed on AT&T shares, which lost the stock rally. AT&T shares fell about 20% last year. Shares fell slightly to $ 29.47 at noon on Wednesday.
The company projected stability for 2021, predicting basic adjusted earnings in line with last year’s $ 3.18 per share result and revenue growth of around 1%, with free cash flow of $ 26 billion. The company generated a free cash flow of $ 27.5 billion in 2020, a figure highlighted by executives as a sign of strength.
“The core business is doing well,” said AT&T chief financial officer John Stephens. “This shows everyone the power of our resilient customer base. Cash is not fictitious, it is real. As such, he is a true arbiter of value. “
AT & T’s board last month declined to raise the quarterly dividend after 36 years of rising payments. Payments to shareholders will still cost the company about $ 15 billion this year. The company’s recent financial forecast would allow it to continue paying this amount until 2021.
The company enters the year with a list of new leaders. Its longtime head, Randall Stephenson, retired as chairman of the board earlier this month after leaving the post of CEO in 2020. Stephens plans to retire later this year.
AT&T is now run by Mr. Stankey. WarnerMedia chief financial officer Pascal Desroches plans to take over as chief financial officer later this year. William Kennard assumed the presidency for a long time director and former chairman of the Federal Communications Commission.
Write to Drew FitzGerald to [email protected]
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