AT&T's Sluggish Sales Put More Pressure on Time Warner Deal

• April 25 2018
• Scott Moritz

AT&T Inc. sales and earnings missed analysts’ estimates last quarter, putting additional pressure on the company to complete its Time Warner Inc. takeover and transition into a more diversified media giant.

AT&T Inc. sales and earnings missed analysts’ estimates last quarter, putting additional pressure on the company to complete its Time Warner Inc. takeover and transition into a more diversified media giant.

Earnings amounted to 85 cents a share in the quarter, excluding some items, the carrier said on Wednesday. That fell short of the average prediction of 88 cents, sending the shares down as much as 4.2 percent in late trading.

The results threaten to renew concerns that AT&T’s grip on mobile-phone and TV customers is slipping -- a deterioration that the $85 billion purchase of Time Warner is meant to address. AT&T is in the sixth week of a courtroom battle defending the deal, which U.S. antitrust officials sued to block because it may increase TV prices for consumers. The defense has picked apart the Justice Department’s case, making it look increasingly likely that the transaction will be completed.

If AT&T prevails, it will hand Chief Executive Officer Randall Stephenson control of some of the most popular programming in the world, including TV shows and movies from HBO, CNN, TNT and the Warner Bros. studio.

AT&T’s subscriber figures were a mixed bag last quarter, but the company continues to lose the kind of customers that once formed its base. It shed 22,000 phone subscribers, while gaining 49,000 new tablet, smartwatch and Wi-Fi hot-spot customers.

On the TV front, AT&T lost 187,000 conventional pay-TV customers. But the addition of 312,000 customers for DirecTV Now, its online streaming service, gave the Dallas-based company a total of 125,000 new video customers in the first quarter.

Sales fell 3.4 percent to $38 billion, a steeper decline than analysts projected.

Stock Slump

The shares fell as low as $33.71 in extended trading on Wednesday. Even before the dip, they were down 9.5 percent this year.

The results follow stronger-than-expected subscriber growth at rival Verizon Communications Inc. In that case, the New York-based company offset shrinking mobile-phone subscriber rolls with more customers using wireless for smartwatches and cars.

Verizon has made its own attempts to diversify, including new ventures such as Oath, the media and advertising division that owns AOL and Yahoo’s web business.