WarnerMedia Drives AT&T Growth in Q2, as HBO and DirecTV Lose Subscribers

WarnerMedia was AT&T’s fastest-growing division in the second quarter of 2019. But the telco showed ongoing signs of trouble in its pay-TV business, with DirecTV and DirecTV Now again posting subscriber losses — and HBO dropping U.S. customers in the period. Revenue for WarnerMedia was $8.35 billion, up 5.5% year over year primarily driven by the consolidation of Otter Media, higher Warner Bros. revenue and gains at Turner and HBO. AT&T reported a 778,000 net loss in DirecTV satellite and U-verse TV customers, which it attributed to an increase in customers rolling off promo discounts and competition. It lost a net 168,000 DirecTV Now subs, which it said was due to price hikes and fewer promotions. AT&T’s Entertainment Group revenue (which includes its consumer wireline businesses) dropped 1% to $11.4 billion, as video revenue fell 1.7% in Q2. Operating income rose 2.6%. “WarnerMedia delivered another strong quarter with both revenue and operating income growth,” AT&T CEO Randall Stephenson said in announcing results. “And our Entertainment Group profitability continued to stabilize, and even grow. Across the board, it was a solid quarter that puts us in position to have a really strong year.”