The pandemic weighed heavily on AT&T’s media assets in the third quarter, but a strong showing in its core wireless business helped the US’s second-largest telecoms company upgrade its free cash flow guidance for the year.
AT&T, which owns HBO and the Warner Bros movie studio, said revenues fell to $42bn in the quarter from $45bn a year ago. Adjusted earnings sank 19 per cent to 76 cents a share, from 94 cents a year ago, matching analyst forecasts. The company said Covid-19 wiped away 21 cents in the quarter.
Like other media groups, WarnerMedia has been hit hard by the pandemic, leaving cinemas empty and production shut for much of the summer. Revenues at WarnerMedia dropped to $7.5bn in the three months to the end of September, down from $8.4bn a year ago.
HBO Max, the group’s streaming rival to Netflix, was a bright spot. Total subscribers to HBO, including the Max platform, climbed to 38m in the quarter, and 57m worldwide. The number of HBO customers who activated the new streaming service doubled to 8m in the quarter.
AT&T said it expects to have $26bn in free cash flow this year, up from about $25bn previously estimated.
AT&T has been offloading assets to trim its heavy debt-load after a series of pricey deals, including the $85bn acquisition of Time Warner. That transaction transformed the Texas telecoms group into a major media company, as the owner of HBO, the Warner Bros movie studio and CNN.
It also loaded AT&T with $180bn of net debt when the deal closed in 2018, which the company has been cutting down over the past year through asset sales and other measures. AT&T’s net debt stood at $149bn by the end of September.
John Stankey, chief executive, said the stronger cash flow would allow the company to invest and pay down debt.
Shares in AT&T climbed 2.2 per cent in pre-market trade.