DirecTV’s subscriber churn woes could continue in Q4 as promo pricing ends

DirecTV was hit with record subscriber losses during the third quarter, and that trend could continue due to the timing around some promotional pricing.During the third quarter, AT&T posted net subscriber losses of 346,000 for its traditional pay TV services, DirecTV and U-verse. In a new research report, analyst firm MoffettNathanson said that as promos launched in mid-June 2016 expire, AT&T should see average revenue per user go up. But it could also see some significant churn based on how much rates increase after the promotional pricing period ends for many customers.“To the extent that rates do rise significantly for that much of the subscriber base, one might reasonably expect elevated churn in response. There is no such thing as a free lunch,” MoffettNathanson wrote.MoffettNathanson explains that for the first year of the promotional pricing, AT&T didn’t see any material impact on EBITDA or ARPU. But after that, customers in the second year of the promotion were being stacked on top of the normal amount of promotional pricing subscribers, and so by June 2018 DirecTV had as much as 40% of its subscriber base on promotional pricing.