After AT & T’s advertising revenue was decimated by a third in the second quarter, things are looking good. Type of.
In its third quarter results released this morning, AT&T advertising revenue rose 10.2% to $ 1.7 billion. The gains were almost entirely due to the NBA season resumption and political advertising, which helped stabilize the ongoing challenges Covid-19 is facing across the entertainment and media industries, and AT&T in particular.
Turner was a bright spot for the segment that owns and manages Turner Sports cable properties like TBS, TNT, CNN, truTV. Total Turner revenue increased 5.6% year over year to $ 3.2 billion and benefited from the move of the NBA basketball season into the third quarter. Turner’s advertising revenue increased 18% year over year to $ 1.07 billion for the third quarter. (However, Turner’s year-to-date advertising revenue was still down 17.7% due to the impact of Covid-19 in previous quarters.)
Revenue for WarnerMedia, the television and film division of AT&T, which also includes Turner, declined 10% year over year to $ 7.5 billion. Both the Warner Bros. and Home Box Office segments saw revenue declines, which was expected given the ongoing impact of Covid-19 on theater, production and content licensing revenues. HBO’s revenue declined slightly 2.1% to $ 1.8 billion as content revenue decreased but subscription rates and revenue increased.
Overall, AT&T revenue declined 3.1% year over year to $ 34.3 billion.
Much of the film and television production has resumed, and executives are optimistic that the content pipeline will help bolster the range of content-forward products and services, as well as adjacent advertising revenues. The company had about 180 productions on the roadmap prior to the arrival of Covid-19 in March, and the company has now resumed filming on about 130 of those projects, AT&T CEO John Stankey told investors Thursday morning.
“I breathe easier. I think everyone’s breathing easier – that’s probably a bad analogy in the Covid environment, ”said Stankey. “I think we are no longer in the forest at this point, from the cold in the middle of the pandemic to one where we feel we can produce and drive for hours. And that will help our products. Most of all, it’ll help HBO Max. ”
The streaming service, which was launched in May, is becoming more and more of a ray of hope for the company after a slow start. HBO Max activations, which are free to current HBO subscribers, more than doubled when compared to the second quarter levels that lagged after some branding confusion and complexities in subscribing to the platform.
Stankey previously said the company “had more work to do” educating linear HBO subscribers of their eligibility to upgrade to HBO Max at no additional cost. It seems like the investment in HBO Max (which cost $ 600 million in the quarter and will cost $ 2 billion by year-end, CFO John Stephens said) is starting to pay off.
The total number of domestic HBO and HBO Max subscribers, which include wholesale, consumer direct, and promotional subscriptions, was over 38 million in the US and 57 million worldwide. (HBO Max hasn’t made an international debut yet, so global numbers apply to HBO only.) That number surpasses AT & T’s previously announced year-end target of 36 million combined subscribers for HBO and HBO Max.
These subscription numbers are especially important as premium videos continue to decline elsewhere. AT & T’s entertainment group, which includes premium video and broadband services, declined 10.2% to $ 10.1 billion. Premium TV subscribers, including DirecTV, U-verse and AT&T TV, lost 590,000 total subscribers in the quarter. Of that, 37,000 went to AT&T TV Now, the company’s virtual MVPD service.