AT&T has been bleeding cable subscribers left and right. Cord cutters are leaving their respective cable companies before the companies can even replace the subscribers. Cable companies have been profiting for longer than three decades, but it’s a whole different ball game now.
In order to stop the bleeding, cable companies have been replacing with cheap streaming offers. In case for AT&T, they used the service DirecTV Now to try and keep subscribers that are leaving. But this strategy doesn’t seem to be working. Analysts are also saying that it’s all AT&T’s fault for how badly they are losing cable subscribers.
MoffettNathanson analyst Craig Moffett thinks that DirecTV Now deals may be to blame here. Right now, AT&T is giving away DirecTV Now, a service that should cost $35, for just $10 to any of its millions of cellular subscribers, and it’s one heck of a deal. It’s also been giving away DirecTV, its satellite service, for a $25-a-month promotional rate. This doesn’t really make a whole lot of sense for AT&T, but their main point is that they want to keep their subscribers from the cable loss.
“It is now clear that none of that promotionality [sic] really helped that much,” Moffett said. “At best, AT&T’s satellite offers may have slowed the erosion of DirecTV from what otherwise would have been even worse.” Customers that have been jumping ship have been staying, but at much discounted rates, which means AT&T is losing money, and a lot of it.
Last quarter, AT&T lost nearly 400,000 traditional cable subscribers, according to documents filed last week. The company stated that they had a net loss of 90,000 pay TV subscribers, which when you compare to 300,000 DirecTV Now subscribers means that 390,000 traditional subscribers have left the cable service in just 3 months.
“The video net losses were driven by heightened competition in traditional pay TV markets and over-the-top services, hurricanes and our stricter credit standards,” AT&T said. “The decline of traditional video subscribers negatively impacts our Entertainment Group revenues and margins, resulting in an adjusted consolidated operating income margin that will be essentially flat versus the year-ago third quarter.”