Over the previous 5 years, AT&T has spent lots of of billions of making ready for the streaming wars, happening a spree of mergers and acquisitions to construct a juggernaut that would stand in opposition to corporations like Netflix, Apple, and Amazon. However as this week’s earnings confirmed, it’s not working fairly the way in which AT&T executives had hoped.

The numbers have been grim — not only for AT&T, however for standard cable normally. Based on AT&T’s fourth quarter earnings report, the corporate misplaced four.1 million pay TV subscribers in 2019 — 1.16 million of them within the final three months of the yr alone. Round 945,000 AT&T clients dropped the corporate’s conventional TV companies final quarter, and one other 219,000 clients hung up on AT&T’s creatively named AT&T TV Now web video platform, beforehand named DirecTV Now.

AT&T brushed apart the corporate’s losses — and a day inventory slide — by telling traders the subscriber losses have been resulting from an intentional discount in general promotions, and a renewed “concentrate on profitability” on the Dallas-based firm.

However that’s not the entire story. AT&T spent big quantities of cash constructing a streaming-ready media conglomerate — from its $67 billion acquisition of DirecTV in 2015, to the vastly controversial $108.7 billion merger with Time Warner in 2018 — and now that invoice is coming due. The 2 offers saddled AT&T with a mammoth mountain of debt, putting the telecom large between a rock and a tough place. Even with the Trump tax cuts — estimated to have delivered AT&T a $42 billion windfall — AT&T nonetheless carried greater than $151 billion in debt on the finish of 2019, almost all of it because of its M&A appetites.

AT&T handed that debt on to its subscribers within the type of value hikes, which in flip accelerated the corporate’s subscriber losses. And whereas these value hikes definitely helped AT&T enhance its revenues (common month-to-month income for conventional TV customers was $131 on the finish of 2019, up from $121.76 late final yr), it got here at a steep reputational price.

AT&T workers have additionally bore the brunt of the corporate’s debt-recovery efforts. The Communications Staff of America — the nation’s greatest telecom union — this week complained that AT&T has laid off 37,818 jobs because the Tax Cuts and Jobs Act was handed in late 2017, the exact reverse of what the corporate promised whereas it was lobbying for the legislation’s passage.

AT&T’s TV ambitions weren’t helped by a yr crammed with quite a few extra missteps, together with a rising roster of so many seemingly conflicted and redundant streaming manufacturers (HBO Go, HBO Now, AT&T Now, AT&T TV, AT&T WatchTV, AT&T U-verse, DirecTV), even AT&T assist workers sometimes discovered themselves befuddled.

Craig Moffett, a Wall Road telecom and media sector analyst who downgraded AT&T inventory to a “promote score” final November, instructed The Verge he expects issues will doubtless worsen for AT&T earlier than they get higher. And the corporate’s looming launch of yet one more $15 monthly streaming service subsequent Could — HBO Max — isn’t doubtless to assist.

“They purchased legacy belongings after which tried to spin a narrative about the way it positioned them to disrupt the established order,” Moffett mentioned. “It ought to have been apparent that that was by no means going to work out nicely.”

Moffett mentioned AT&T’s issues are compounded by the truth that the corporate has numerous programming contracts set to run out this yr. The brand new contracts will drive up AT&T’s prices, which in flip can be handed on to shoppers, accelerating its current wire chopping worries.

AT&T had initially hoped that the large inflow of subscribers acquired from DirecTV would offer the corporate larger leverage in negotiations with programmers. Equally, it hoped that buying Time Warner and HBO gave the corporate entry to top-shelf unique programming that would assist it do battle in opposition to deep-pocketed opponents like Apple and Amazon.

However many on Wall Road (together with a few of AT&T’s personal shareholders) felt that buying a standard satellite tv for pc TV firm on the eve of the wire chopping revolution by no means completely made sense. Neither did driving up the corporate’s debt load — then shoveling these prices onto the again of shoppers already pissed off by the countless value hikes and abysmal customer support for which the pay TV sector is infamous.

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