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AT&T Expects to Lose Over 1 Million TV Subscribers & Have More Blackouts in the 3rd Quarter of 2019

Today, AT&T sent shareholders an update for its 2020 goals. In that letter, AT&T warned that they could lose over 1 million subscribers in the third quarter of 2019. AT&T went on to say that there could be more blackouts as contracts come up for renewal.

“Coming into the year, the company expected some tough content negotiations, specifically for retransmission deals. Stephens said the company has been holding a hard line in negotiations, which is allowing it to achieve its content cost management goals. In the third quarter, Stephens said the company expects an incremental 300,000 to 350,000 premium video losses above the previous quarter’s premium video results, driven by: aggressively managing costs with retransmission negotiations, some of which resulted in content provider black outs; and from limiting promotional pricing.”

In the second quarter of 2019, AT&T lost over 778,000 TV subscribers. Adding an additional 300,000 would push them over 1 million subscribers lost in just three months. Disney has recently warned of a possible blackout, which could be one of the blackouts AT&T is worried about. Yet it sounds like more contracts in addition to Disney will also be coming up for renewal.

The letter to shareholders went on to say that AT&T expected subscriber trends to improve due to far fewer customers on promotional pricing. AT&T did warn though that they expect some tough content negotiations for both local channels and cable networks.

“In 2020, AT&T expects premium TV subscriber trends to improve due to far fewer customers on promotional pricing and the nationwide launch of AT&T TV, which delivers a premium streaming experience. Other factors that may help improve Entertainment Group EBITDA beyond 2019 include: broadband growth due to increased fiber penetration and availability of higher speeds; a higher-quality video and broadband customer base with lower churn and higher ARPU; continued cost management; advertising growth from Xandr and less pressure from declining legacy products.”

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