It’s been a hell of a week for AT&T. On Monday, the company found itself being criticized by an activist investor looking to implement strategic changes to AT&T (the logic being AT&T is unfocused and has become too acquisition-heavy). Monday night saw AT&T customers blitzed by ESPN ads, ticker updates, and blackouts alerting them to the fact that ESPN and other Disney-owned channels were in jeopardy of being dropped this month.
On the heels of those two developments comes a new update from AT&T in their latest shareholder update.
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.
That 300-350,000 lost subscribers would be on top of the previous quarter’s lost subscriber number, which came in at 778,000. So we’re looking at around a 1.1 million-subscriber loss in a 90-day period. That’s over 12,000 subscribers calling and cancelling everyday. Actually it’s probably a bit more than that- they’re still adding some amount of new customers; it’s just on average 12,000 MORE people a day are cancelling over those becoming a new customer. That’s obviously not good and a huge reason why an activist investor is nudging AT&T to considering potentially selling off various components of the company (67 billion, and right before people started cutting the cord!).
Could that projection of the added 300-350,000 subscribers potentially factor in the possibility that ESPN and Disney-owned networks could be pulled? Perhaps, although I’ll guess that never happens.
More than likely, that nearly 50% acceleration in subscriber loss is stemming from the various carriage disputes the company has engaged in over the summer and early fall. To put it simply, people are leaving because the shit they want to watch is suddenly not being carried. That would include:
- AT&T (which includes DirecTV, U-verse, and AT&T TV Now) not having CBS in many markets for about three weeks over the summer.
- AT&T dropping Nexstar stations, which included 120 network network affiliates across the country. The carriage dispute lasted ~50 days.
- U-verse and AT&T TV Now (formally DirecTV Now) currently without NFL Network and NFL RedZone.
It’s hard to guess exactly which of these various carriage disputes is most to blame for the additional 300-350k subscriber loss, but it’s hard to argue that this spike of customer loss isn’t tied to anything other than people being pissed that content they’re excited about is now gone from their package. I was of the thought that U-verse would bring back NFL Network and NFL RedZone; cable and satellite companies have historically caved to the NFL when it comes to missing actual games. AT&T seems to be signaling that they’re fine going down that road regardless of the vocal outcry from customers.
I get settled into my spot on the couch for this season’s 1st NFL Sunday and flip through my @ATT @Uverse channels for Redzone….and there is no Redzone. I am 11th level of hellfire pissed right now. This premium sports package is worthless garbage. @cole_nieman
— Clayton Nieman (@TheNiemanDome) September 8, 2019
— GW Waldenfepher (@greg544) September 8, 2019
— Del Shaffer (@delshaffer) September 12, 2019
U-verse has long been rumored to be a low priority for AT&T, as they’ve tried to funnel existing customers to the more expensive and lucrative DirecTV. I’d imagine many customers who try to cancel will get a hard sell that DirecTV does have NFL Network, along with a sweetheart offer. But for many, the inability to bolt a satellite on their roof or lawn just isn’t an option.
AT&T seems to think these carriage disputes and whatever better terms they’re getting helps their business. But losing roughly 5% of your customers in 90 days is a heavy price to pay. Hopefully, a prolonged ESPN and Disney carriage dispute isn’t in the cards. You can bet your ass AT&T would be sure to lose another million customers the upcoming quarter should they go down that road.