4:02 AM PST 1/30/2019 by Georg Szalai , Etan Vlessing
SourceThe telecom giant reports its latest financials and subscriber figures along with results at the former Time Warner businesses.
Telecom giant AT&T, led by chairman and CEO Randall Stephenson, on Wednesday reported improved fourth-quarter financials for its WarnerMedia unit, led by Warner Bros., and said it lost 267,000 subscribers at its DirecTV Now streaming service in the period.
DirecTV Now dropped 267,000 subscribers in the fourth quarter, ending 2018 with 1.6 million, down from 1.86 million as of Sept. 30. The company also lost 403,000 traditional DirecTV satellite TV subscribers, but added 12,000 at IPTV service U-Verse. "During the fourth quarter of 2018, including the impact of losses of 267,000 from DirecTV Now, total video subscribers decreased 658,000," the company said. "DirecTV Now net adds included approximately 65,000 on free or substantially free trials."
Meanwhile, at WarnerMedia, led by CEO John Stankey, the fourth-quarter earnings contribution reached $2.7 billion as operating income jumped 33 percent to $2.6 billion amid gains across all units. Revenue rose 5.9 percent to $9.2 billion, led by $4.5 billion from Warner Bros. (up 10.4 percent), $3.2 billion at Turner (down slightly) and $1.7 billion from HBO (down slightly).
Warner Bros. in the quarter recorded 29.3 percent growth in theatrical product revenue and 3.9 percent growth in television product revenue, with operating income up 57 percent, driven by the higher revenue that was "partially offset by higher expenses."
"Theatrical product revenues increased primarily due to the performance of theatrical releases, including Aquaman, Fantastic Beasts: The Crimes of Grindelwald and A Star Is Born, which also represented a more favorable mix and number of film titles compared to the prior year," the company said. "Television product revenues increased primarily due to higher licensing of series and initial telecast revenues."
HBO's fourth-quarter operating income jumped 29 percent to $622 million as a 12 percent drop in expenses, thanks to lower programming and distribution costs, outweighed a 0.4 percent revenue hit. Subscription revenue fell 3 percent amid a carriage dispute with Dish Network, which began in November. But content and other revenue increased due to higher international licensing revenue.
Turner's operating income for the latest quarter rose $1.3 billion on lower expenses, led by lower programming and markets costs thanks to the timing of original series. Turner recorded a decline of 6 percent in advertising revenue, due to lower ratings in the U.S. and unfavorable foreign-exchange rates abroad, partially offset by an increase of 3.7 percent in subscription revenue.
WarnerMedia is planning to launch, in the fourth quarter, its own streaming service, overseen by AT&T veteran Brad Bentley as general manager and executive vp for direct-to-consumer development at WarnerMedia.
Wednesday's earnings report was AT&T's second that included a full three-months period of Time Warner, which the company had acquired last year for $85.4 billion.
Otter Media, the AT&T-owned digital media business, recently laid off around 10 percent of its employees amid a reorganization of its portfolio of digital brands, including Fullscreen, Rooster Teeth and Ellation. Among the changes is a plan to bring the gaming-centric Machinima brand under the Otter umbrella. The company is also consolidating direct-to-consumer businesses Rooster Teeth, Crunchyroll and VRV under the Ellation banner.