AT&T indicated early signs of the downfall of one of its own businesses last Wednesday when the company announced a loss in customers due to cord-cutting. Then on Thursday, October 12, shares of AT&T decreased by 6%.
On October 11, AT&T, which owns DirecTV, said in a regulatory filing it was set to report a significant loss in subscribers to the broadcast satellite service provider during its quarterly earnings announcement. Even though in Q3 2017 the company gained 300,000 users for its OTT service, DirecTV Now, it lost 390,000 cable and satellite TV subscribers, leaving the company at a net loss of 90,000 subs. The news caused AT&T shares to dip and put the company’s overall decrease in share price at over 15% for the year.
Thought AT&T also cited the recent succession of natural disasters as part of the reason for its disappointing earnings report, the cord-cutting phenomenon is apparent, and it’s not going away. In fact, it’s gaining momentum. By the end of this year, over 22 million adults in the US will have cut the cord, predicts eMarketer. That’s about 5.5 million more than the number of US adults who said goodbye to cable and satellite services last year.
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As of Q2 this year, AT&T’s DirecTV Now had reached nearly 500,000 subscribers. The streaming service offers live access to upwards of 60 TV channels for $35 per month. Regular DirecTV packages costs $50 a month at minimum.
It wasn’t just AT&T whose shares dropped after the telecom company’s Wednesday disclosure. Shares of Time Warner, which AT&T has been planning to acquire since last year, dropped 2% on Thursday. AMC Network saw a 7% drop in shares, while Dish Network’s fell by 5%, and shares of Sinclair Broadcast Group and Discovery Communications fell by 4%. Meanwhile, cord-cutter favorite Netflix had a stellar Q3 earnings report.
