AT&T's DirecTV Now Added at Least 200,000 Subscribers in First Month -- 2nd Update
January 20 2017 - 12:54PM
Dow Jones News
By Thomas Gryta and Austen Hufford
AT&T Inc. said its new streaming-video service, DirecTV Now,
added at least 200,000 paying subscribers in December, its first
month of operation, giving investors a first glimpse into the
launch of the business.
The service was released Nov. 30 with promotional pricing and
incentives, including offering a bundle of more than 100 channels
for $35 a month. That promotion is now finished and the same bundle
costs $60 a month. AT&T aims to attract young people,
cord-cutters and other consumers who don't sign up for its
traditional pay-TV packages.
The service has hit some bumps since launch, with outages and
customers complaining about technical glitches that cause crashes,
features not functioning and other bugs.
On Friday, the carrier said it added more than 200,000 net video
additions through December, "entirely driven" by paying DirecTV Now
subscribers. The number of DirecTV subscribers may be higher as the
company has posted net video losses recently, including losing
3,000 in the third quarter and 49,000 in the second quarter.
A company spokesman declined to comment beyond the company's
regulatory filing. AT&T reports fourth quarter results on Jan.
25.
Earlier this month, J.P. Morgan analyst Philip Cusick said he
expected significant initial interest in the new service. "We would
not read much into that given the $35/month promotion and could see
a quick fall off in adds once the promotional pricing ends and
customers start to churn," he wrote in a research note.
RBC analyst Jonathan Atkin said Thursday the cost of the DirecTV
Now launch could hurt profits in the quarter but the service "could
serve as a catalyst for long-term growth" by allowing AT&T to
use its scale to capture market share at a lower cost than
rivals.
The service has established competition from video services such
as Netflix and Hulu, along with Sling TV from Dish Network Corp.
and Sony Corp.'s PlayStation Vue. More such services are expected
to launch in the future. Netflix has 93.8 million streaming
customers.
Separately, AT&T said it expects to record a fourth-quarter
loss of about $1 billion related to the annual reassessment of
pension and post-employment benefit plans.
The company lowered the discount rates on its retirement
obligations leading to a loss of $3 billion, which was offset by
other gains. Discount rates calculate the present value of a
companies' future liabilities, so a drop in that rate increases the
current funding needed to fund the future obligation.
AT&T also said it added a net 900,000 branded domestic
wireless subscribers in the quarter and saw 700,000 legacy 2G
cancellations. The company said in 2012 that it would shut down the
network by 2017 and most of the service is now deactivated.
Write to Thomas Gryta at thomas.gryta@wsj.com and Austen Hufford
at austen.hufford@wsj.com
(END) Dow Jones Newswires
January 20, 2017 12:39 ET (17:39 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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