With no live sports on the schedule, AT&T lost nearly 900,000 paid subscribers across its premium TV business, which includes DirecTV, U-verse and AT&T TV.
That’s nearly double the number of Q1 2019 paid subscriber losses, which were around 544,000.
Total pay TV revenue was $10.5 billion, down 7.2%.
Sports have long been considered paid TV’s bulwark against cord cutting. But with the shutdown of live sporting events due to the ongoing pandemic, people are jumping off the cable ship.
John Stephens, AT&T’s CFO, said he anticipates “increases in premium TV subscriber cord cutting, as well as lower revenues from commercial locations, such as hotels, bars and restaurants.”
AT&T withdrew all prior Q2 guidance due to the unpredictable nature of the COVID-19 situation.
The lack of live sports is of course also having an impact on advertising, which is “going to be soft,” said WarnerMedia president and COO John Stankey.
With sports content removed from the portfolio, “we’re going to see pressure,” Stankey said.
Advertising is also affected by the near-complete loss of ad spend from stressed sectors, including travel and hospitality.
“As that occurs, the scatter market is not as robust as it’s been, [and] I don’t know what the second quarter brings,” Stankey said. “[But] ratings are still stronger than expected.”
The COVID-19 disruption is also leading AT&T’s WarnerMedia to rethink its theatrical business, which is “obviously a stressed business right now,” Stankey said. “When theaters are closed, it’s hard to generate revenue.”
Taking a hint from other studios, Warner Bros., for example, is planning to release its animated feature “Scoob!”, originally scheduled to hit theaters on May 15, directly to video on demand.
And, for obvious reasons, AT&T is putting a lot of faith in HBO Max, which is slated for release on May 27.
“This crisis has shown the value of premium streaming entertainment,” Stephens said.
Netflix proved that point during its Q1 earnings call on Tuesday, when it announced nearly 16 million new paid subscribers for the quarter.
Although AT&T’s linear business is under pressure, other products are more resilient to the crisis, including its subscription-based wireless business and enterprise networks, which are both essential as people shelter – and work – in their homes.
Still, overall revenue declined in the quarter to $42.8 billion, a 4.8% loss.
But there was some growth, at least, for Xandr Media, which saw a 14.8% year-over-year uptick to $498 million in operating revenue thanks to demand for addressable advertising, particularly in the political sector, and higher CPMs across Xandr’s product offerings.