When AT&T acquired DirecTV, the second largest wireless carrier in America was essentially betting (to the tune of $49 billion) that people are will still be paying money to avail of the standard package of TV channels. The move may not sound wise today especially that industry watchers are beginning to notice that consumers are getting rid of their usual cable and satellite TV subscriptions in favor of viewing web based content via services such as Roku or Apple TV. Data by Forrester Research certainly supports such idea -- about 24 percent of adults (those whose ages are in the 20s and early 30s) now are no longer paying to see TV content.
But according to AT&T’s first quarterly results of since the wireless carrier acquired DirecTV, 26,000 new subscribers signed up for DirecTV subscriptions. AT&T also reported that it had added 2.5 million wireless customers. 26,000 new sign ups for DirecTV is certainly not bad, and it now appears that AT&T knew what it was doing when it bought the satellite TV service back in July earlier this year.
With its latest quarterly results, AT&T managed to surpass the profit estimates projected by Wall Street analysts, but the wireless carrier did miss regarding revenue projections. The wireless carrier posted revenues (not including one time items) of $0.74 a share on $39.1 billion in earnings. Projections by analysts had the company earn a profit of $0.69 on $40.42 billion.
AT&T had acquired DirecTV in the middle of last quarter, and the wireless carrier did not count earnings from the first 24 days of the period. The company stated that it would have posted $41.2 billion in earnings if it had included the unaccounted days. As for AT&T’s sharesm, they increased 1.7 percent to $34.55 in after hours trading.
AT&T’s move to traditional TV is somewhat against the flow. Competitor carriers such as Verizon Wireless are now shifting to more web based video services. Even established names in cable such as Comcast are now offering a standalone TV streaming option for web customers. Add the fact that most consumers nowadays are increasingly into Internet based services such as YouTube, Netflix, and Amazon Prime Video.
But AT&T also made a clever choice of trying to integrate DirecTV’s assets into its already formidable wireless carrier resources. Is it starting to pay off? While 26,000 new subscriptions is a very good start, perhaps it is still too early to tell for sure. After three more months, industry watchers will be waiting to find out.
