(Bloomberg) -- AT&T Inc. topped earnings estimates as cost cuts helped offset steep TV-subscriber losses and higher spending on its media business, a positive sign as the company tries to mend its balance sheet and turn attention to the launch of its HBO Max streaming service.
Fourth-quarter earnings excluding one-time items were 89 cents a share. Analysts had predicted 87 cents, according to estimates compiled by Bloomberg. The company, which operates DirecTV, the largest U.S. TV service, lost 1.2 million subscribers, more than the 782,000 decline analysts expected, according to data compiled by Bloomberg.See more details.
The record annual loss of 4.1 million U.S. TV subscribers that AT&T reported for last year highlights the challenge facing the company as cord cutters switch to streaming services like Netflix Inc. and Hulu. AT&T has also tried to widen margins in its entertainment business by eliminating discounts, further accelerating the exodus.HBO Max, launching in May, will be a primary focus for AT&T as it tries to bolster its appeal to its whole universe of customers. Revenue for the existing HBO premium service rose 1.9% on gains in digital customers, but it’s an open question whether millions of people will want to subscribe to HBO Max for the same $15 monthly cost, even with expanded content.The company raised a net $18 billion last year through moves like selling real estate and tower rent payments, helping it pay down debt and lower its leverage ratio as it had promised investors such as activist Elliott Management Corp. AT&T expects to sell a further $5 billion to $10 billion in assets this year.
AT&T shares fell 3.4% to $37.28 in New York trading at 12:01 p.m. The stock was up 37% in 2019, outpacing the 9% gain by peer Verizon Communications Inc. and topping the 29% increase in the S&P 500 Index.
Read the statement.See AT&T estimates.
(Updates analysts’ TV-subscriber estimate in second paragraph, based on an adjustment to the data compiled by Bloomberg.)
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