It’s a new world for AT&T in the post-Time Warner merger era.
On Tuesday, the company reported a mixed bag of results for the second quarter. It missed Wall Street expectations on revenue but beat the Street’s predictions when it came to earnings per share, as well as number of wireless subscribers.
AT&T reported earnings of 91 cents per share, better than the 85 cents that analysts had predicted, according to Yahoo Finance. But the company’s revenue for the second quarter fell short of expectations at $39 billion, compared with the $39.4 billion analysts had expected.
Still, AT&T did see growth in its wireless business after a disappointing first quarter. For the second quarter, the company reported that it added 46,000 postpaid mobile phone subscribers, or customers who pay their bills monthly. This is an improvement over the first quarter, when AT&T lost 22,000 postpaid phone subscribers.
This is the first quarterly earnings report sincein June. The US Department of Justice had fought to stop the merger.
After a district judge approved the deal, the companies quickly closed it and began integrating the businesses, renaming Time Warner as WarnerMedia. The Justice Department has appealed the ruling, but AT&T executives say they’re confident they’ll win the appeal, too.
While rival Verizon has, AT&T has been trying to transform itself into a vertically integrated media company of the future.
Like Verizon, AT&T sees its wireless network as a key component of its strategy, which will allow it to deliver streaming TV service as consumers increasingly cut the cord on traditional pay TV offerings. But AT&T sees original content from WarnerMedia and new revenue from targeted advertising as the path forward.
The idea is that WarnerMedia content will increase the number of hours AT&T customers spend on AT&T’s network. This will help the company collect more data on viewers, allowing it to sell more targeted advertising. To help push even further with this strategy, AT&T also recently announced the acquisition of the ad platform AppNexus.
Meanwhile, the company has been losing pay TV subscriptions as more cord-cutters search for cheaper alternatives. During the second quarter, AT&T lost 286,000 pay TV subscribers from DirecTV satellite services. But it gained 342,000 DirecTV Now streaming customers during the same period, bringing the total to 1.8 million subscribers. That’s similar to the first quarter of the year, when it lost 188,000 pay TV subscribers and gained 312,000 DirecTV streaming customers.
WarnerMedia helped offset some of these losses, as revenue in its Turner division grew by about 4 percent, due to stronger advertising revenue. The HBO division also saw a boost in subscriptions raising revenue by 13 percent during the quarter.
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