Technology

AT&T Loses 1 Million Video Users After Spending Billions On Mergers To Dominate Video

This wasn’t how it was supposed to go for AT&T. In AT&T executives heads, the 2015, $67 billion acquisition of DirecTV and the 2018 $86 billion acquisition of Time Warner were supposed to be the cornerstones of the company’s efforts to dominate video and online video advertising. Instead, the megadeals made AT&T possibly one of the most heavily indebted companies in the world. To recoup that debt, AT&T has ramped up its efforts to nickel-and-dime users at every opportunity, from bogus new wireless fees to price hikes on both its streaming and traditional video services.

Not too surprisingly, these price hikes are now driving subscribers to the exits.

The company’s latest earnings report indicates that AT&T not only lost another 778,000 “traditional” video subscribers last quarter (satellite TV, IPTV), but it lost another 168,000 subscribers at its DirecTV Now streaming service — due to “higher prices and less promotional activity”:

“The service had lost 83,000 subscribers in the first quarter after a 267,000 drop in the fourth quarter of 2018. As of the end of June, the service had 1.3 million subscribers. Cowen analyst Colby Synesael had predicted DirecTV Now would lose 50,000 subscribers in the second quarter.
The company also lost 778,000 traditional pay TV subscribers in the second quarter between its DirecTV satellite TV and U-Verse services after losing 544,000 in the first quarter, citing “an increase in customers rolling off promotional discounts, competition and lower gross adds due to a focus on the long-term value customer base.”

Keep in mind this is happening before the playing field gets flooded with new competitors, like Disney’s new Disney+ service, which is expected to launch this November. Disney’s pulling most of its content off of services like Netflix and making it exclusive to its platform. Other companies, like Apple and Comcast, also have new streaming ventures in the works with a similar focus on exclusives. As competition heats up, many of these companies are going to be happy to take a temporary loss to establish market share. AT&T can’t do that because it’s swimming in debt.

Granted, AT&T still has some tricks up its sleeve. Its successful lobbying gambit to kill net neutrality and erode FCC authority over telecom means nobody will really be minding the store as AT&T begins using its dominance of broadband to its tactical advantage. While ISPs have tried to remain on their best behavior as they wait for the result of the multi-AG lawsuit against the FCC (which would restore the net neutrality rules if the FCC loses), AT&T has still managed to try and test the waters with anti-competitive moves like only making usage caps apply to competitors’ services.

Should the FCC win its lawsuit, you can expect AT&T’s anti-competitive efforts to quickly become far more creative and way less subtle. Because if there’s anything history tells us about natural, government-pampered monopolies like AT&T, they’re terrible at innovating their way through direct, head to head competition, as these latest quarterly numbers clearly attest. And when you can’t win in fair head to head competition, you cheat. It’s the American way!

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