AT&T Shares Lower On Concerning TV Subscriber Trends

Credit card spending data shows slowing subscription rates for AT&T Inc.'s T AT&T TV Now and DirecTV services and a drop in the number of subscribers for HBO in October, sending the company's stock lower on Wednesday.

"While video monetization remains healthy, subscriber metrics are not," KeyBanc analyst Brandon Nispel wrote in a note. He has a Sector Weight rating on AT&T, citing its exposure to "secularly challenged businesses."

What The Data Show For AT&T TV Now

KeyBanc's Key First Look Data from credit card usage showed AT&T TV Now subscribers down 36% year over year in October, worse than expected. DirecTV indexed customers were down 16% year over year in the month.

"Both metrics are showing sequential deceleration and are tracking below our estimates for 4Q19," Nispel wrote.

HBO subscribers actually declined, KeyBanc said, citing the end of "Game of Thrones." Nispel said HBO subscription revenue will likely decline sequentially into the fourth quarter and then into 2020.

HBO Max Not Up To Par With Disney+, Netflix?

Nispel did note the streaming service HBO Max launches in May 2020, and AT&T is hoping for 50 million domestic subscribers, up from 34 million for HBO today. The service is seen as a competitor to Walt Disney Co.'s DIS new Disney+ streaming service, which announced it signed up 10 million subscribers at launch, and Netflix Inc. NFLX.

But, "we doubt HBO Max will be anywhere near as successful as Disney+," Nispel wrote. For one, HBO Max's $14.99 a month price isn't competitive with Disney+ at $6.99, or Netflix at $12.99, Nispel said. HBO Max won't benefit from the hype of a new service, since HBO is already a well-known channel.

AT&T's stock traded lower by 3.3% to $36.72 per share at time of publication.

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