DirecTV Q1 2019 Results - 627,000 Net Loss Subs (DirecTV & Directv Now)

[goaliebob99]

AT&T Reports First-Quarter Results


AT&T Reports First-Quarter Results

First-Quarter Consolidated Results

• Diluted EPS of $0.56 as reported compared to $0.75 in the year-ago quarter
• Adjusted EPS of $0.86 compared to $0.85 in the year-ago quarter
• Consolidated revenues of $44.8 billion
• Cash from operations of $11.1 billion, up 24%
• Capital expenditures of $5.2 billion
• Free cash flow of $5.9 billion

Note: AT&T's first-quarter earnings conference call will be webcast at 8:30 a.m. ET on Wednesday, April 24, 2019. The webcast and related materials will be available on AT&T’s Investor Relations website at NYSE:T) is a diversified, global leader in telecommunications, media and entertainment, and technology. It executes in the market under four operating units. WarnerMedia’s HBO, Turner and Warner Bros. divisions are world leaders in creating premium content, operate one of the world’s largest TV and film studios, and own a world-class library of entertainment. AT&T Communications provides more than 100 million U.S. consumers with entertainment and communications experiences across TV, mobile and broadband services. Plus, it serves nearly 3 million business customers with high-speed, highly secure connectivity and smart solutions. AT&T Latin America provides pay-TV services across 11 countries and territories in Latin America and the Caribbean, and is the fastest growing wireless provider in Mexico, serving consumers and businesses. Xandr provides marketers with innovative and relevant advertising solutions for consumers around premium video content and digital advertising through its AppNexus platform.

AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc. Additional information is available at about.att.com. © 2019 AT&T Intellectual Property. All rights reserved. AT&T, the Globe logo and other marks are trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T’s filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this news release based on new information or otherwise.

This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company’s website at https://investors.att.com.

 

[goaliebob99]

AT&T Reports First-Quarter Results
First-Quarter Consolidated Results

Diluted EPS of $0.56 as reported compared to $0.75 in the year-ago quarter
Adjusted EPS of $0.86 compared to $0.85 in the year-ago quarter
Consolidated revenues of $44.8 billion
Cash from operations of $11.1 billion, up 24%
Capital expenditures of $5.2 billion
Free cash flow of $5.9 billion
Note: AT&T's first-quarter earnings conference call will be webcast at 8:30 a.m. ET on Wednesday, April 24, 2019. The webcast and related materials will be available on AT&T’s Investor Relations website at Investor Relations.

AT&T Inc. (NYSE:T) reported solid Mobility and WarnerMedia results in the first quarter, including wireless service revenue growth and postpaid phone net adds, and grew operating income and EBITDA in the Entertainment Group.

“Our first-quarter results show that we’re delivering on what we promised,” said Randall Stephenson, AT&T chairman and CEO. “We’re on plan to meet our de-leveraging goals with strong free cash flow and asset sales. We grew Entertainment Group EBITDA in the quarter and are confident we’ll meet or exceed our full-year target. FirstNet deployment continues ahead of schedule. And we are recognized for having the nation’s best wireless network1, as well as the fastest network2.

“All this speaks volumes about our focus on our strategic priorities and our ability to grow our Mobility, WarnerMedia and emerging Xandr businesses. Our teams are executing well and have turned in a good performance to start the year.”

First-Quarter Results

Communications Highlights

Mobility:
Service revenues up 2.9%; operating income and EBITDA growth with postpaid phone and prepaid net adds
179,000 postpaid smartphone net adds in the U.S.
80,000 postpaid phone net adds
96,000 prepaid net adds of which 85,000 are phones
Entertainment Group:
13% operating income growth with solid ARPU gains
6.9% EBITDA growth as company targets stability
Focus on long-term value customer base
22.4 million premium TV subscribers – 544,000 net loss
1.5 million DIRECTV NOW subscribers – 83,000 net loss
Nearly 300,000 AT&T Fiber gains; 45,000 broadband net adds with broadband revenue growth of more than 8%
12.4 million customer locations passed with fiber
WarnerMedia Highlights

Solid revenue growth with strong operating income growth with gains in all business units
Turner subscription revenue growth
HBO digital subscriber growth continued as last season of Game of Thrones begins
Strong Warner Bros. revenue and operating income growth
Latin America Highlights

93,000 Mexico wireless net adds
Xandr Highlights

Advertising revenues grew by 26.4% largely due to the AppNexus acquisition
Consolidated Financial Results

AT&T's consolidated revenues for the first quarter totaled $44.8 billion versus $38.0 billion in the year-ago quarter, up 17.8%, primarily due to the Time Warner acquisition. Declines in legacy wireline services, Vrio, wireless equipment and domestic video were more than offset by the addition of WarnerMedia, domestic wireless services and Xandr. Operating expenses were $37.6 billion versus $31.8 billion in the year-ago quarter, an increase of about $5.8 billion due to the Time Warner acquisition and higher commission amortization from adopting new accounting standards last year, partially offset by lower wireless equipment costs and cost efficiencies.

Operating income was $7.2 billion versus $6.2 billion in the year-ago quarter, primarily due to the Time Warner acquisition, with operating income margin of 16.1% versus 16.3%. When adjusting for amortization, merger- and integration-related expenses and other items, operating income was $9.6 billion versus $7.5 billion in the year-ago quarter, and operating income margin was 21.4% versus 19.7% in the year-ago quarter due to the acquisition of Time Warner.

First-quarter net income attributable to AT&T was $4.1 billion, or $0.56 per diluted share, versus $4.7 billion, or $0.75 per diluted share, in the year-ago quarter. Adjusting for $0.30, which includes merger-amortization costs, merger- and integration-related expenses, a non-cash actuarial loss on benefit plans and other items, earnings per diluted share was $0.86 compared to an adjusted $0.85 in the year-ago quarter.

Cash from operating activities was $11.1 billion, and capital expenditures were $5.2 billion. Capital investment – which consists of capital expenditures plus cash payments for vendor financing – totaled $6.0 billion, which includes about $800 million of cash payments for vendor financing. Free cash flow — cash from operating activities minus capital expenditures — was $5.9 billion for the quarter.

1Based on GWS OneScore Sept. 2018
2Based on analysis by Ookla® of Speedtest Intelligence® data average download speeds for Q1 2019

*About AT&T

AT&T Inc. (NYSE:T) is a diversified, global leader in telecommunications, media and entertainment, and technology. It executes in the market under four operating units. WarnerMedia’s HBO, Turner and Warner Bros. divisions are world leaders in creating premium content, operate one of the world’s largest TV and film studios, and own a world-class library of entertainment. AT&T Communications provides more than 100 million U.S. consumers with entertainment and communications experiences across TV, mobile and broadband services. Plus, it serves nearly 3 million business customers with high-speed, highly secure connectivity and smart solutions. AT&T Latin America provides pay-TV services across 11 countries and territories in Latin America and the Caribbean, and is the fastest growing wireless provider in Mexico, serving consumers and businesses. Xandr provides marketers with innovative and relevant advertising solutions for consumers around premium video content and digital advertising through its AppNexus platform.

AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc. Additional information is available at about.att.com. © 2019 AT&T Intellectual Property. All rights reserved. AT&T, the Globe logo and other marks are trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T’s filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this news release based on new information or otherwise.

This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company’s website at Investor Relations.

 

[nelson61]

"Focus on long-term value customer base"

Translation : dump customers looking for deals

 

[Claude Greiner]

When your focus is no longer video, no wonder why they lost almost 600,000 subs.

AT&T needs to sell off Directv and let someone else take it over that cares.

As long as Dish does not buy them I’m fine

 

[NashGuy]

When your focus is no longer video, no wonder why they lost almost 600,000 subs.

AT&T needs to sell off Directv and let someone else take it over that cares.

As long as Dish does not buy them I’m fine

Perhaps AT&T will sell off the satellite TV business in a few years. But if that's the plan, then they'll try to transition as many customers as possible onto the forthcoming streaming version of DirecTV, which the CEO today referred to as their "satellite replacement product", as well as the upcoming new subscription streaming service built around HBO and the rest of WarnerMedia. It's possible that the satellite service has under 10 million customers in a few years, down from under 19 million now. Maybe at that point they spin it off into a separate subsidiary, off the main AT&T books, or just sell it outright if they can find a buyer.

 

[Soccernut]

They have us idiots that keep paying crazy money for the service but everything has a limit, by the time they wake up there won't be a business to sell off.

 

[Juan]

When your focus is no longer video, no wonder why they lost almost 600,000 subs.

AT&T needs to sell off Directv and let someone else take it over that cares.

As long as Dish does not buy them I’m fine

Its all about streaming...satellite is dying for both providers...your frand grand children will probably talk about it like a telegraph or pony express...or even mailing a letter.. stuff old people use

Sent from my SM-G950U using the SatelliteGuys app!

 

[CSM]

When your focus is no longer video, no wonder why they lost almost 600,000 subs.

AT&T needs to sell off Directv and let someone else take it over that cares.

As long as Dish does not buy them I’m fine

AT&T needed DTV to do DTV Now and DTV over IP. They said they could have never done that just having 6 million UVerseTV customers. If they sold of DTV could they still keep DTV Now and DTV over IP?

 

[mdram]

Its all about streaming...satellite is dying for both providers...your frand grand children will probably talk about it like a telegraph or pony express...or even mailing a letter.. stuff old people use

Sent from my SM-G950U using the SatelliteGuys app!

15% of the us population will disagree with this.
and i am on that 15%
streaming, cable, ect are not an option, its satellite or an antenna

its a captive audience

 

[Juan]

15% of the us population will disagree with this.
and i am on that 15%
streaming, cable, ect are not an option, its satellite or an antenna

its a captive audience

There are still party lines in some places...others still listen to the radio..its going to get very expensive to keep satellite tv...fewer customers = higher maintenance prices = higher subscription prices...if there is not a profit to be made on rural customers..satellite will fase away

Sent from my SM-G950U using the SatelliteGuys app!

 

[mdram]

There are still party lines in some places...others still listen to the radio..its going to get very expensive to keep satellite tv...fewer customers = higher maintenance prices = higher subscription prices...if there is not a profit to be made on rural customers..satellite will fase away

Sent from my SM-G950U using the SatelliteGuys app!

and as more people swap to steaming and the income is seen, it will raise in price to match cable/sat
servers are not free, neither is the bandwidth from them to the customer

there are costs involved on all sides

 

[Juan]

and as more people swap to steaming and the income is seen, it will raise in price to match cable/sat
servers are not free, neither is the bandwidth from them to the customer

there are costs involved on all sides

Really?...how many 100g a year engineers to maintain a satellite fleet vs streaming...streaming us a lot less labor intesive...you don't need the expensive uplink facilities or multimillion dollar replacement satellites every 10 years...the costs have been weighed and satellite loses...it just past its prime and time to move on to more profitable types of delivery systems

Sent from my SM-G950U using the SatelliteGuys app!

 

[Bruce]

15% of the us population will disagree with this.
and i am on that 15%
streaming, cable, ect are not an option, its satellite or an antenna

its a captive audience

Sorry, the Corporations do not care, look at all the new streaming services starting up, does Disney care that you ( the 15%) cannot get their new channel, nope, they only care about the 85% that can.

If they cared you ( again the 15%) would have access to fast broadband.


Sent from my iPad using SatelliteGuys

 

[Claude Greiner]

The streaming craze will stop when the cable providers (Comcast and Spectrum) stop becoming drug mules by feeding people with cheap fast internet with high or unlimited data caps.

I sell for all of them, and every month they tell us we need more video sales, and what can we do to get more video sales.

The problem is Comcast for example has 25 meg service starting at $30 in most areas. People ask how much more to add Tv and we are a little over $100 by the time we add taxes and fees.

So then the customer is like sell me “just internet”

When the price of streaming content becomes the same as traditional video, and the internet providers get together and charge more money, only then will streaming be on the same level as traditional video.

When the time comes the only ones doing streaming are going to be the internet providers themselves as they will be initiating content on their own network without going through the actual internet.

Wait and see. Data caps are coming down.

You’ll still see $30 internet, but with a much lower data cap.

You want the higher caps needed for streaming, you’ll need a bigger package and any money you think your saving streaming will go right back to the ISP.

The only reason why AT&T is rolling out Fiber is because DSL doesn’t service all homes and they can’t keep up with the gig speeds offered by the cable companies.

Comcast was 6 megs in my area when I got 18 meg U-verse internet.

When Comcast offered 150 meg, U-verse offered 45 and U-verse got dumped.

U-verse wired 1 gig fiber and I’m back with AT&T until Comcast wires fiber to my house.

 

[nelson61]

When your focus is no longer video, no wonder why they lost almost 600,000 subs.

AT&T needs to sell off Directv and let someone else take it over that cares.

As long as Dish does not buy them I’m fine

No way can they sell it.

They had their rose colored glasses on when they overpaid and spent 50 billion to buy Directv.

They would be lucky if they could get 50 cents on the dollar back while they are scrambling to cover the debt service from their various buying splurges.
The hit would kill them.

 

[NashGuy]

AT&T's decision to buy DirecTV was just bad for everyone. Bad for AT&T shareholders, bad for DirecTV subscribers. Well, I'm sure the acquisition was good for the investment bankers who worked the deal. Everyone else, not so much.

 

[slice1900]

Really?...how many 100g a year engineers to maintain a satellite fleet vs streaming...streaming us a lot less labor intesive...you don't need the expensive uplink facilities or multimillion dollar replacement satellites every 10 years...the costs have been weighed and satellite loses...it just past its prime and time to move on to more profitable types of delivery systems

Sent from my SM-G950U using the SatelliteGuys app!

You don't think all the computers and networks required for streaming require their own expensive engineers to maintain? You think the facilities for streaming are just a few PCs serving tens of millions of customers? Those datacenters are at least as expensive as the satellite uplink facilities.

Since AT&T is launching their last satellite in two months, there will no longer be any satellite replacement costs (and they last much longer than 10 years) Their fleet should be good for at least a decade. They will know years in advance when that will happen, and will be able to tell people when they'll be phasing out service.

At the current number of subscribers it would cost about 50 cents a month per subscriber to REPLACE the satellites as needed. Even if they were down to 2 million subscribers that's only $5 a month. It isn't so easy to calculate the costs of maintaining broadcast centers etc. but today it is spread across so many customers the overhead is tiny. Someday they'll be down to only a couple million subscribers and then the overhead won't be so tiny, but we're years away from that.

AT&T has no incentive to speed up the transition from satellite to streaming, they can let it take its natural course, secure that they have a satellite fleet that is good for at least a decade so there is no hurry. They will have an obvious incentive to push new customers toward IP since it will be a much cheaper install (no installer visit required) but there is no incentive to move existing customers - it doesn't cost one penny more to maintain the fleet, uplink centers etc. to handle one more customer like it does with streaming!

 

[mdram]

also, those datacenters probably require upgrading more often than 10 years

storage media, routers, ect ect

no one ever thinks about all that

 

[SpaethCo]

Really?...how many 100g a year engineers to maintain a satellite fleet vs streaming...streaming us a lot less labor intesive...you don't need the expensive uplink facilities or multimillion dollar replacement satellites every 10 years...the costs have been weighed and satellite loses...it just past its prime and time to move on to more profitable types of delivery systems

Let's throw some numbers at this:

From the Netflix 2018 10-K annual SEC filing (Document page 22):

Technology and development expenses consist of payroll and related expenses for all technology personnel, as well as other costs incurred in making improvements to our service offerings, including testing, maintaining and modifying our user interface, our recommendation, merchandising and streaming delivery technology and infrastructure. Technology and development expenses also include costs associated with computer hardware and software.

2018 Spend: $1,221,814,000
Cost as a percentage of subscriber related revenue: 8%​

Unfortunately when T absorbed DIRECTV, they stopped reporting satellite distribution costs. For the sake of scale, we can compare it to Dish though. From Dish's 2018 10-K annual SEC filing (dish_Current folio_10K Taxonomy2015_newsections_Taxonomy2018 page 75)

Satellite and transmission expenses. Satellite and transmission expenses” totaled $577 million during the year ended December 31, 2018, a decrease of $81 million or 12.4% compared to the same period in 2017. The decrease in “Satellite and transmission expenses” was primarily related to a decrease in transponder capacity leased from EchoStar, related to our DISH TV service and decreased costs in our digital broadcast operations.

Cost as a percentage subscriber related revenue: 4.3%
​

Satellite transmission costs don't change with the number of subscribers or video feeds; streaming does. For every screen of video, streaming distribution costs increase linearly.

In the long run, streaming will not be cheaper. Other aspects of streaming can continue to win going forward (including user experience and video quality), but long-term costs will be higher. It's simple math -- satellite distribution is ( cost / subscribers ) while streaming distribution is ( cost * subscribers ).

 

[Inclined Orbit]

About six or seven years ago before streaming was being discussed at Directv, the facility I worked at was upgrading lots of Cisco routers just to handle internal routing of DTV content within the building and those little routers were costing about $250k a pop. At that time there were only a pair of OC192s (10Gbit each) feeding the facility. A comment a few years ago from an employee still there was the connectivity to that facility is now "mind boggling" in comparison.

When all the smoke clears at some point I think the price of existing satellite related expenses might look cheap compared to what ATT will be investing in other avenues of content delivery to their dwindling customer base. And I suspect the current amount of glitches and outages will still be there due to laying off a good portion of the monitoring folks.

You don't think all the computers and networks required for streaming require their own expensive engineers to maintain? You think the facilities for streaming are just a few PCs serving tens of millions of customers? Those datacenters are at least as expensive as the satellite uplink facilities.

Since AT&T is launching their last satellite in two months, there will no longer be any satellite replacement costs (and they last much longer than 10 years) Their fleet should be good for at least a decade. They will know years in advance when that will happen, and will be able to tell people when they'll be phasing out service.

At the current number of subscribers it would cost about 50 cents a month per subscriber to REPLACE the satellites as needed. Even if they were down to 2 million subscribers that's only $5 a month. It isn't so easy to calculate the costs of maintaining broadcast centers etc. but today it is spread across so many customers the overhead is tiny. Someday they'll be down to only a couple million subscribers and then the overhead won't be so tiny, but we're years away from that.

AT&T has no incentive to speed up the transition from satellite to streaming, they can let it take its natural course, secure that they have a satellite fleet that is good for at least a decade so there is no hurry. They will have an obvious incentive to push new customers toward IP since it will be a much cheaper install (no installer visit required) but there is no incentive to move existing customers - it doesn't cost one penny more to maintain the fleet, uplink centers etc. to handle one more customer like it does with streaming!