AT&T Is Hoping HBO Max Will Turn The Tide

AT&T Inc T lost another 897,000 premium TV subscribers during the first quarter of 2020. The communications company hasn't done much to stop these subscriber losses as its efforts seem to be focused on raising the average revenue per customer instead of offering deals to appeal to its existing customers and lure in new ones. Consequently, the company withdrew its whole year forecast, as the impact of the COVID-19 pandemic diminished the strong growth in monthly phone subscribers with revenue falling short of Wall Street expectations.

First Quarter Miss

For the entire Communications division, overall revenue was down 2.6% at $34.2 billion. As for all of AT&T, revenue was $42.8 billion which is overall down comparing to the same quarter last year when it amounted to $44.8 billion. Company-wide operating income was $7.5 billion and this is up from $7.2 billion last year.

As for video-service revenue, it dropped 8.4% year-over-year to $7.4 billion due to declines in TV subscribers. This was partially offset by higher average revenue per user. Mobile revenue was $17.4 billion, up 0.2% year-over-year. Operating income in the mobile division was $5.8 billion, up 9%.

Advertising revenue was severely hit due to the postponement of live sports, but AT&T's WarnerMedia division took the greatest burden as revenue fell by $1 billion from 2019 to 2020. 

Cost-Cutting In Progress

Back in March, AT&T announced cost cuts over the next three years that will amount to tens of billions of dollars. These initiatives also include job cuts as the company is pursuing to undergo an efficiency transformation.

This cost-cutting comes as the company prepares to step up its streaming efforts. Between Netflix NFLX, Walt Disney Co's DIS Disney+, Comcast Corporation's CMCSA's Peacock, Apple Inc's AAPL Apple TV+, and Amazon.com Inc's AMZN Prime Video, competition in streaming is fierce. 

AT&T is preparing its latest entre, HBO Max, set to launch on May 27. And executives are expecting this debut to achieve an impressive level of scale and reach. For starters, roughly 10 million current subscribers will gain free access, so there is a loyalty reward plan. AT&T has high hopes for HBO Max, a $15-per-month service, with a goal of 50 million HBO Max subscribers in the United States within five years. It is planned to be included with certain mobile, TV, and Internet plans, meaning that many customers will get it for no extra charge.

But the question ultimately comes down to giving people the content they love is. Can the content on HBO Max keep people coming back for more as they have Netflix? Executives are hoping the answer is yes, and with other areas of the company reeling, a new success story couldn't come at a better time. 

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be sent to ivana@iamnewswire.com

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