AT&T posted a $13.9bn loss in the fourth quarter, as the telecoms group and owner of Warner Bros and HBO warned that Covid-19 had continued to have an impact on most of its businesses, resulting in $650m in charges.
The group’s results were also hit by a $15.5bn charge on its pay-TV business, as customers abandon cable and satellite in favour of online streaming.
WarnerMedia has been hit hard by the pandemic, which shattered the film business and stalled production on new shows. Revenues at WarnerMedia dropped to $8.6bn in the three months to the end of December, down from $9.5bn a year ago.
Warner’s bright spot has been HBO Max, the group’s streaming rival to Netflix, as audiences stuck in lockdown flock to at-home entertainment. The number of HBO customers who activated the new streaming service doubled to 17m in the quarter, during which the blockbuster Wonder Woman 1984 debuted on HBO Max.
Total subscribers to HBO, including the Max platform, climbed to 41m in the quarter, and 61m worldwide.
Under chief executive Jason Kilar, WarnerMedia has made a big bet on streaming, announcing last month that it would release all its films in 2021 on HBO Max simultaneously with cinemas. The slate includes big-budget movies such as the new instalment of the Matrix franchise and a remake of the science fiction epic Dune.
HBO Max had been hampered by disputes with Amazon and Roku, two of the largest streaming devices, making it impossible for many Americans to sign up for the service. But Warner struck deals with both Amazon and Roku during the quarter, providing another boost to sign-ups.
Strength in AT&T’s core wireless business helped the US’s second-largest telecoms company eclipse Wall Street forecasts for earnings and revenue. The company reported adjusted earnings of 75 cents on revenue of $45.7bn. Analysts had forecast earnings of 73 cents on revenue of $44.6bn.
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 transaction closed in 2018, which the company has been trimming down over the past year through asset sales and other measures. AT&T’s net debt stood at $147.5bn at the end of December.