AT&T’s extravagant $61.7 billion acquisition of direct-to-home satellite TV giant DirecTV three years ago continues to go sideways in light of the corporation’s controversial ongoing retransmission battles and just-released 2019 second-quarter financial statement.

AT&T reported it hemorrhaged 946,000 total pay-TV subscribers across its various platforms in its second quarter ended June 30th.

Breaking that down, AT&T’s 2Q financial statement listed churn of 778,000 linear TV subscribers from its combined DirecTV satellite and U-verse telco-TV services and 168,000 from over-the-top (OTT) service DirecTV Now. The loss compared to 262,000 linear subscriber losses and a gain of 343,000 DirecTV Now subs, respectively, in the same period a year ago .

AT&T’s total pay-TV customers dropped to 21.58 million, which is nearly 2 million fewer than last year, dropping the company to the country’s second largest pay-TV operator behind cable giant Comcast (21.86 million subscribers). The cable multi-system operator will report its 2Q subscriber activity Thursday.

Compounding matters is the fact that the reported subscriber numbers were tallied before AT&T’s failure to renew a retransmission agreement with the CBS Network by 11 p.m. last Friday. That forced the multichannel, multi-platform pay-TV provider to pull CBS-owned-and-operated affiliate stations from 14 markets across the country including some of the largest — like New York and Los Angeles. It earlier lost Nexstar-controlled broadcast stations, leaving many more subscribers without local affiliate stations for networks including CBS, NBC, ABC and Fox.

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AT&T’s CEO Randall Stephenson said Tuesday that he thought the company and CBS were close to making a deal, adding that the network still had not responded to AT&T’s last offer Friday. He acknowledged, however, that AT&T and Nexstar were still far apart.

Meanwhile, DirecTV still has not renewed an agreement to continue its exclusive with the National Football League (NFL) to carry the coveted and lucrative NFL Sunday Ticket out-of-market football game package once the current contract expires after the 2021 season.

AT&T attributed the 2Q TV subscriber losses to user cancellations after promotional viewing periods expired, a company focus on landing higher-paying customers for longer-term value and intensified competition.

In addition, DirecTV Now, which is AT&T’s attempt to capture fleeing cord-cutters, also shed customers. AT&T reported that DirecTV Now lost some 168,000 subs in the second quarter, compared to adding 343,000 subs in 2Q-2018. AT&T attributed the decline to price increases and reduced promotional activity.

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DirecTV Now’s total subscriber count stood at 1.34 million at the end of the period, down about 469,000 subs from the 1.8 million on record the year before.

On a more positive note, in its bid to transition broadband service subscribers to a newer, faster fiber network, AT&T said it lost 34,000 high-speed Internet subscribers, while adding 318,000 fiber customers. AT&T reported having 13.8 million total broadband customers (including 3.4 million fiber customers) at the end of the quarter, compared to 13.7 million broadband subs including 2.2 million fiber customers last year.

By Greg Tarr

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