Shares of TV providers drop as AT&T warns of video losses
NEW YORK (AP) — Signs that more people are dropping their traditional TV subscriptions weighed on TV providers’ stocks Thursday.
AT&T said it lost 90,000 video subscribers in the U.S. in the third quarter. It’s a steeper drop than the same period last year, even though gains from its newer, cheaper online cable-like service, DirecTV Now, are included. DirecTV Now wasn’t available in the July-September quarter in 2016.
DirecTV Now added 300,000 subscribers in the quarter, so AT&T lost about 390,000 satellite TV and cable customers.
AT&T, which is also the No. 2 wireless carrier in the U.S., blames tough competition from both traditional TV providers like Comcast and newer digital-video services like YouTube TV. It also blames the impact from hurricanes and stricter credit standards for customers.
AT&T’s prediction, issued after the market closed Wednesday, echoed Comcast’s forecast in early September of third-quarter losses of 100,000 to 150,000 video customers due. That would be Comcast’s largest quarterly loss since 2014. Comcast also blamed competition and weather.
Rising prices for traditional TV bundles and those growing digital options are increasingly driving customers online and away from traditional TV.
“It should be clear that DirecTV, like all of its cable peers, is suffering from the ravages of cord-cutting,” MoffettNathanson analyst Craig Moffett wrote in a Wednesday night note to investors.
Traditional TV subscribers in the U.S. peaked in 2012 at just over 101 million, according to media research group Kagan, and the industry has shed more than 5 million customers since then.
More losses are expected. UBS analyst John Hodulik said in a Thursday note that “cord cutting continues to gain steam as streaming TV builds momentum.”
AT&T stock fell 6.1 percent to close at $35.86 Thursday. Shares of cable companies Comcast, Charter and Altice and rival satellite TV provider Dish also dropped.