A PYMNTS Company

Make No Mistake, AT&T Is in Limbo

By  |  February 1, 2018

Posted by Bloomberg

    Get the Full Story

    Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.

    yesSubscribe to our daily newsletter, PYMNTS Today.

    By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions.

    By Tara Lachapelle

    Make No Mistake, AT&T Is in Limbo

    Going to court isn’t fun. But for AT&T Inc., its day can’t come soon enough.

    The company reported year-end results on Wednesday and, as promised, showed that it technically managed to add video-entertainment subscribers for the first time since before it bought DirecTV in 2015. Don’t get too excited, though.

    The DirecTV satellite business — for which AT&T paid $49 billion plus the assumption of debt — is still bleeding customers. DirecTV Now, the cheaper over-the-top streaming service born out of that business, is what’s offsetting the declines: The app had an impressive 1.2 million subscribers as of December. The key word there is cheaper. Or as Craig Moffett of MoffettNathanson put it in a recent note, there’s “little economic offset from a growing OTT business.”

    It highlights the problem for traditional pay-TV providers looking to smaller online offerings, such as DirecTV Now, as the future. The operating margin for AT&T’s entertainment division, which houses all these TV services, is already contracting — it was 8.4 percent in the fourth quarter, down from 10.3 percent a year earlier.

    Continue Reading…