AT&T reported lower earnings and profits as the COVID-19 pandemic affected its businesses.
In its first report on HBO Max, AT&T said it had 36.3 million U.S. subscribers to HBO Max and HBO as of June 30, up from 34.6 million on Dec. 31.
The company said that revenues were hurt by the COVID-19 pandemic across all segments, but most significantly to lower content and ad revenue at Warner Media.
Premium TV subscribers fell by 886,000 to 17.7 million. The company added 225,000 AT&T Fiber broadband subscribers but it had an overall loss of 102,000 broadband subscribers.
“Our solid execution and focus in a challenging environment delivered significant progress in the quarter, most notably the successful launch of HBO Max, resilient free cash flow and a strengthened balance sheet,” said John Stankey, AT&T chief executive officer. “Our resilient cash from operations continues to support investments in growth areas, dividend payments and debt retirement. We are aggressively working opportunities to sharpen our focus, transform our operations and continue investing in growth areas, with the customer at the center of everything we do.”
Net income fell to $1.2 billion, or 17 cents a share, from $3.7 billion, or 51 cents a share, a year ago.
Revenue fell 8.9% to $41 billion.
“We expect operating results and cash flows to continue to be adversely impacted by COVID-19 for at least the duration of the pandemic,” AT&T said. “We expect our third-quarter results to be impacted by the shift in timing of advertising revenue from the postponement, restarting or cancellation of sporting events and the related timing of the sports costs; lower revenue from the closure of movie theaters and postponement of theatrical releases, partially offset by lower production and other programming expenses. Higher expenses to protect front-line employees, contractors and customers and the continued transition of customers to our fiber broadband services and the acceleration of the disconnection of linear TV services due to the pandemic.”
WarnerMedia’s earnings before interest, tax, depreciation and amortization (EBITDA) fell to $2.08 billion from $2.399 billion. Revenue fell 22.9% to $8.835 billion from $6.814 million.
Turner revenue for the second quarter of 2020 were $3 billion, down 12.4%, driven by lower advertising revenues primarily from the postponement of the NBA season. Subscription revenue declines were also down due to lower regional sports network revenues and unfavorable foreign exchange rates.
Turner operating expenses totaled $1.4 billion, down 37.2 percent versus the second quarter of 2019, driven by the timing of sports costs associated primarily with the delayed NBA season. Turner operating income margin was 52.6 percent compared to 33.8 percent in the year-earlier quarter.
HBO revenue fell 5.2% to $1.6 billion. It had lower subscription revenue due to domestic linear subscriber declines, partially offset by growth in digital and international.
HBO operating expenses totaled $1.5 billion, up 32.5% because of increased programming expenses related to HBO Max. HBO operating income margin was 6.9%t compared to 33.4%
Warner Bros. revenue for the second quarter of 2020 were $3.3 billion, down 3.9%, driven by the absence of theatrical releases, partially offset by higher television revenues, including internal sales to HBO Max that are eliminated upon consolidation.
Warner Bros. operating expenses totaled $2.6 billion, down 11.1% primarily because of the production hiatus and lower marketing expenses.
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