HBO Max at 4.1M; AT&T U.S. down 954k; Vrio down 2.5M video subs in 2Q 2020

DALLAS — AT&T Inc. (NYSE:T) reported second-quarter results that continue to underscore the financial strength and ample liquidity of the business even with current economic conditions.

WarnerMedia

John Stankey – Chief Executive Officer, AT&T (on earnings call): “One month after launch, HBO Max had about 3 million retail subscribers and 4.1 million subscribers had activated their Max accounts. Of those, more than 1 million were wholesale subscribers through AT&T.”

Entertainment Group

• Premium TV subscribers (which includes DIRECTV, U-verse and AT&T TV subscribers): 886,000 loss due to competition as well as lower gross adds from the continued focus on adding higher value customers
• AT&T TV NOW subscribers: 68,000 net loss due to less promotional activity

Video (in thousands):

                                                                            Three Months Ended
                ------------------------------------------------------------------------------
                 9/30/18  12/31/18   3/31/19   6/30/19   9/30/19  12/31/19   3/31/20   6/30/20
                --------  --------  --------  --------  --------  --------  --------  --------
Connections
  Satellite       19,625    19,222
  U-verse          3,669     3,681
                --------  --------  --------  --------  --------  --------  --------  --------
 Premium TV       23,294    22,903    22,359    21,581    20,418    19,473    18,576    17,690
 Over-the-Top*     1,858     1,591     1,508     1,340     1,145       926       788       720
                --------  --------  --------  --------  --------  --------  --------  --------
Total             25,152    24,494    23,867    22,921    21,563    20,399    19,364    18,410

Net Adds                  
  Satellite         -359      -403
  U-verse             13        12
                --------  --------  --------  --------  --------  --------  --------  --------
 Premium TV         -346      -391      -544      -778    -1,163      -945      -897      -886
 Over-the-Top*        49      -267       -83      -168      -195      -219      -138       -68
                --------  --------  --------  --------  --------  --------  --------  --------
Total               -297      -658      -627      -946    -1,358    -1,164    -1,035      -954

* Premium TV connections and net adds include AT&T TV, which initially launched in 3Q19 and expanded nationwide in 1Q20. 1Q19 connections and net adds include the impact of conforming the Entertainment Group subscriber disconnection policy with the Mobility business and industry practice (to billing cycle basis). This policy change resulted in an additional 117K Premium TV and 38K Broadband subscribers at March 31, 2019.

Vrio

In May 2020, we found it necessary to close our DIRECTV operations in Venezuela due to political instability in the country and to comply with sanctions from the U.S. government. This had minimal impact on segment financials but did result in about 2 million fewer total subscribers in the customer base

• Subscriber Metric – (312,000) net losses, mainly due to the COVID-19 related loss of sporting events and macro-economic conditions; 10.7 million total subscribers at the end of the quarter

Video (in thousands):

                                                                           Three Months Ended
               ------------------------------------------------------------------------------
                9/30/18  12/31/18   3/31/19   6/30/19   9/30/19  12/31/19   3/31/20   6/30/20
               --------  --------  --------  --------  --------  --------  --------  --------
Connections      13,640    13,838    13,584    13,473    13,306    13,331    13,217    10,664
Venezuela                                                                              -2,241
Net Adds            -73       198       -32      -111      -167        25      -114      -312