AT&T lost another 620,000 premium video subscribers in the first quarter as it moves forward with a deal to spin off DirecTV, U-verse and AT&T TV.
The net loss is a significant improvement over the 897,000 premium TV losses in the same quarter of 2020 but AT&T’s total video subscriber base is still shrinking at an alarming annual rate of 14.6%. The company said it ended the quarter with approximately 15.89 million premium video subscribers.
Due to the pending transaction, AT&T is now categorizing its video business segment results as held for sale and reporting quarterly results within its Corporate and Other segment. The company is no longer breaking out subscriber numbers for AT&T TV Now, its virtual MVPD that stopped accepting new subscribers after it was merged with AT&T TV earlier this year.
AT&T’s video business revenues fell 9.2% to approximately $6.7 billion during the quarter but, thanks to some reductions in operating expenses, grew its operating income 13.2% to $901 million.
In February, AT&T and TPG agreed to establish a new company named DirecTV that will own and operate AT&T’s three video services. The companies said that the deal implies an enterprise value for the new company of $16.25 billion. AT&T will own 70% of the common equity and TPG will own 30% for New DirecTV.
While the linear video business continued to sag, AT&T’s WarnerMedia segment was buoyed by more positive momentum for HBO Max. The company is added 2.7 million total domestic HBO Max and HBO subscribers during the quarter, bringing its subscriber totals to 44.2 million domestically and 64 million globally.
AT&T said that its direct-to-consumer subscription revenues were up about 35% and that domestic HBO Max and HBO average revenue per user reached $11.72 during the quarter. Total WarnerMedia revenues were up 9.8% to $8.5 billion.
“We continued to excel in growing customer relationships in our market focus areas of mobility, fiber and HBO Max,” said AT&T CEO John Stankey in a statement. “We also continue to increase penetration in markets where we offer fiber broadband and we’re moving quickly to deploy more fiber. HBO Max continued to deliver strong subscriber and revenue growth in advance of our international and AVOD launches planned for June.”