AT&T Expects DIRECTV "Customer Cleanup" To Continue Throughout 2019

AT&T expects to continue losing DIRECTV and DIRECTV NOW customers throughout 2019.

The comments on this were made by AT&T Communications CEO, John Donovan during a Credit Suisse Conference held in New York today.

These comments also follow on from the comments made by AT&T’s CEO & President, Randall Stephenson, who made it clear AT&T was effectively fine with seeing the DIRECTV NOW customer base shrink for the time being as it was more focused on “high-quality customers.” At the time Stephenson referred to this as an active “customer cleanup” and the same reference was used again today by Donovan when answering a question regarding entertainment customer declines.

According to Donovan, the “customer cleanup” was undertaking at the time felt right. The company was already seeing natural declines from the changing nature of the market overall with the suggestion being it was better to take advantage of the declines to also clean up the part of the user base that are not per-user profitable.

This “cleanup exercise” is still ongoing and Donovan stated the company expects that to be the case for “most of this year.”

Donovan also suggested the expected current (second) quarter customer drop will likely be worse due to the seasonal nature of the quarter and the industry.

Mid-way through March, AT&T introduced changes to its DIRECTV NOW plans which saw customers being charged more each month for access to a lower number of channels.

As this package restructuring did not effectively take place until the start of the second quarter of 2019, the results of those changes will not be evident until AT&T announces its second-quarter financials on Wednesday, July 24.

However, previous to those changes, AT&T was already experiencing an unprecedented drop in the number of subscribers to DIRECTV NOW. During the final quarter of 2018 and the first quarter of 2019, DIRECTV NOW had seen a decline of almost 350,000 subscribers - equating to nearly twenty-percent of the entire DIRECTV NOW subscriber base.

This was in addition to the DIRECTV and U-verse subscriber losses over the same period. For example, AT&T confirmed a loss of 544,000 “premium TV subscribers” during the first quarter of this year.

Overall, AT&T's total video subscriber losses for the first three months of 2019 came in at 627,000. While most of these will be from the natural evolution of the market as customers move from the satellite service to a streaming alternative, AT&T argues the rest are part of this intentional effort to clean up the user base. This is particularly true of the DIRECTV NOW subscriber decline with AT&T having opted to move away from a previous decision to offer lower-priced and fuller-stocked channel packages.

On the DIRECTV satellite side of things, AT&T is working on a plan to lessen the subscriber drop in the future by launching a new streaming version of the service.

This is not due to launch until the third quarter of the year but when it does, Donovan suggested it will “radically” alter the concept of TV.

Around the same time, AT&T also plans to initially make available its new WarnerMedia service, which the WarnerMedia CEO, John Stankey recently argued will be hard to resist thanks to the service's focus on giving customers more of everything.

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John Anon

Editor-in-Chief
John has been writing about and reviewing tech products since 2014 after making the transition from writing about and reviewing airlines. With a background in Psychology, John has a particular interest in the science and future of the industry. Besides adopting the Managing Editor role at AH John also covers much of the news surrounding audio and visual tech, including cord-cutting, the state of Pay-TV, and Android TV. Contact him at [email protected]