After losing nearly 5 million pay TV subscribers across their various platforms in 2019, AT&T executives had told investors that cord cutting should start to decelerate this year amid the launch of the company’s new IP-based video platform, AT&T TV.
But the COVID-10 pandemic, and the related economic recession, will likely disrupt those plans and place AT&T’s pay TV business on an even more accelerated path of degeneration, said MoffettNathanson analyst Craig Moffett.
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Moffett said that instead of an earlier prediction, which called for AT&T’s pay TV base to shrink by 13.1% in 2020 to 16.9 million subscribers, he believes it will now decline by 16.6% to 16.2 million customers.
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For starters, Moffett said economic recession will likely accelerate cord cutting for all providers, with subscribers under pressure to reduce household costs they deem non-essential.
In the more immediate term, however, the loss of live sports amid the pandemic will obliterate the pay TV market’s major linchpin. And no platform is more exposed than AT&T’s DirecTV satellite service, which is built around a robust portfolio of regional sports networks and expensive live-sports assets, like NFL Sunday Ticket.
Despite losing nearly 3.2 million customers last year, DirecTV is still AT&T’s biggest pay TV asset, with more than 16 million subscribers. AT&T has stopped promoting DirecTV, and is no longer coining new subscribers for its other linear pay TV platform, U-verse TV, as it tries to transition its pay TV base to its new IP-based platform, AT&T Now. As Moffett noted in his missive to investors sent April 3: “That would have been a difficult transition under the best of circumstances. These aren’t the best of circumstances.”
Speaking to investors during AT&T’s fourth-quarter earnings call, COO John Stankey said, “As we move through this year and we start shifting to AT&T TV, our gross add performance starts to get much stronger.”
