AT&T Q3 Earnings: HBO Max Hits 38 Million US Subs, Warner Bros Revenue Falls 28%

WarnerMedia revenues slip 10% from the prior year as Turner gets (some) delayed gratification from NBA season

AT&T hit media analysts earnings predictions on the nose for the third quarter of 2020, when the Warner Bros. and HBO parent bested revenue forecasts.

Wall Street expected earnings per share (EPS) of 76 cents on $41.61 billion in revenue, according to a consensus estimate compiled by Yahoo Finance. AT&T actually reported 76 cents of adjusted EPS on $42.3 billion in revenue.

Warner Bros. revenue was down 28%, AT&T said, but HBO Max subscribers were ahead of schedule, with 38 million domestically. AT&T reported 57 million worldwide subs for HBO Max.

WarnerMedia revenue fell 10%. It would have been worse if not for the delayed NBA season’s positive impact on Turner’s third quarter.

AT&T’s largest individual business is still phones, though these days, that means mobile. Its mobility segment posted $17.1 billion in revenue, up 1%. Unfortunately, that was not enough to carry the overarching communications group, which was revenue decline 3% to $34.3 billion as cord-cutting took a chunk out of AT&T’s video subscriber numbers.

“We delivered a solid quarter with good subscriber momentum in our market focus areas of connectivity and software-based entertainment,” said John Stankey, AT&T chief executive officer. “Wireless postpaid growth was the strongest that it’s been in years with one million net additions, including 645,000 phones. We added more than 350,000 fiber broadband customers and are on track to grow our fiber base by more than 25% this year. And we continue to grow and scale HBO Max, with total domestic HBO and HBO Max subscribers topping 38 million — well ahead of our expectations for the full year. Our strong cash flow in the quarter positions us to continue investing in our growth areas and pay down debt. We now expect 2020 free cash flow of $26 billion or higher with a full-year dividend payout ratio in the high 50s%.”

Earlier this month, a week or so after Q3 technically closed, AT&T’s WarnerMedia laid off thousands of employees. Earlier this week, ABC (and now, Netflix) alum Channing Dungey was named Peter Roth’s replacement as chairman of the Warner Bros TV Group.

AT&T stock (T) closed Wednesday afternoon at $26.73 per share. The regular U.S. trading day opens again at 9:30 a.m. ET.

AT&T executives will host a conference call at 8:30 a.m. ET to discuss the quarter in greater detail.

More to come…

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