Worse-than-expected bleeding in AT&T’s pay-TV business last quarter is raising fresh concerns about the company’s ability to compete with Netflix and Disney through newly acquired entertainment properties like HBO.
For the three months ended in March, AT&T lost 544,000 subscribers across its various pay-TV platforms, including DirectTV satellite and U-verse fiber-optic packages. Wall Street analysts had been expecting a decline of 385,000 — sending shares down 4 percent.
The bloodletting only adds to already existing “skepticism” around AT&T’s ability to pull off its massive $85 billion merger of HBO-parent company Time Warner, which requires significant investment, one source said.
AT&T is working to grow the entertainment division by launching a full-scale streaming service that will include content from its Warner Bros., HBO and Turner brands — placing it in direct competition with Amazon, Netflix, and Hulu and Disney.