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July 24, 2019, 12:12 p.m. EDT

AT&T’s video business is decaying and a new streaming service may not save it

Earnings Watch: Facebook, Tesla headline the afternoon slate

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By Emily Bary


Patrick T. Fallon/Bloomberg
AT&T’s video subscriber losses accelerated in the most recent period.

AT&T Inc. has plenty riding on its streaming ambitions as the erosion of its traditional video business continues.

Premium TV declines accelerated last quarter, as AT&T’s /zigman2/quotes/203165245/composite T +1.75%  DirecTV and U-verse businesses shed a combined 778,000 subscribers. Viewers have been fleeing once their two-year price locks expire, and the dismal trend could persist, with management acknowledging that the video business will see more expirations through the end of the year.

Whether the company can tap into streaming to stem the bleeding remains an open question, given that AT&T’s early attempts haven’t made things any better. Streaming service DirecTV Now was originally billed as a way to counteract the decaying satellite TV market, but now its “just another contributor to the decline,” according to MoffettNathanson’s Craig Moffett. It lost 168,000 subscribers last quarter.

The newest effort is HBO Max, a coming streaming service that aims to take advantage of AT&T’s Time Warner acquisition. Though HBO Max isn’t out yet, AT&T already appears to be on the defensive after Walt Disney Co. /zigman2/quotes/203410047/composite DIS -1.12%  set an ultra-low $7 price point for its own coming offering. Rather than transform AT&T’s advertising business, HBO Max may simply be a vehicle for “preserving revenues at HBO” at the expense of the Time Warner’s existing TV licensing business, Moffett said.

Shares gained in Wednesday trading.

•Shares of two old-economy titans are headed in opposite directions after Wednesday reports. Investors were willing to forgive Freeport-McMoRan Inc. /zigman2/quotes/200215692/composite FCX +1.48%  for swinging to a loss due to falling copper prices, but they punished Caterpillar Inc. /zigman2/quotes/203434128/composite CAT -0.25%  for a big earnings miss and a report that contained “nothing that appears to signal an improvement in trends,” according to Jefferies’ Stephen Volkmann.

•Boeing Co. /zigman2/quotes/208579720/composite BA -6.79%  got most of the bad news out of the way ahead of its report, but shares still slid after the company provided new insight on its future. Though issues with the grounded 737 Max jets have been well documented, a new source of stress for Boeing investors is the 777x. The company is still hoping to deliver the first 777x by the end of next year, but it now sees “significant risk to this schedule” due to engine issues and will be postponing the plane’s first flight to early 2020.

See more: Boeing stock falls after ‘messy’ second quarter, doubts on yet another plane

Coming up this afternoon

Just in case Facebook Inc. /zigman2/quotes/205064656/composite FB -2.38%  executives hadn’t been spending enough time preparing for questions on antitrust and privacy investigations, the Justice Department officially confirmed it was investigating Big Tech’s practices late on Tuesday. The company also agreed to pay out boatloads of cash to settle Federal Trade Commission and Securities and Exchange Commission charges.

But despite all the buzz over regulatory actions, such inquiries haven’t dampened long-term sentiment toward Facebook’s stock. Even the $5 billion fine that Facebook must pay the FTC is expected to have “very minor impact on cash balance or stock value,” according to a Bank of America analyst, especially since the company already took a large charge in anticipation of its settlement. And if the company shows progress on some of its newer advertising initiatives, like building marketer interest in the Stories format, investors might be willing to once again overlook the regulatory clouds.

See more: Facebook earnings seem immune to the Big Tech backlash — for now

•Tesla Inc.’s /zigman2/quotes/203558040/composite TSLA -1.92%  “bar has been raised,” according to a Credit Suisse analyst, now that the company showed off strong delivery numbers earlier in the month. That puts pressure on the company to maintain its full-year delivery outlook of 360,000 to 400,000 vehicles and show off positive free-cash flow, in his view. Also look for information about Tesla’s China ramp for the Model 3 as well as commentary on whether management expands demand for the higher-margin Model X and S cars to pick up.

Read: At Tesla, another quarterly loss is likely, but Wall Street is hoping demand remained intact

•Fellow auto maker Ford Motor Co. /zigman2/quotes/208911460/composite F +1.98%  is on the afternoon docket, along with PayPal Holdings Inc. /zigman2/quotes/208054269/composite PYPL -2.33% , which has already told investors to brace for a big earnings impact from its investment in Latin American e-commerce giant MercadoLibre Inc. /zigman2/quotes/200678442/composite MELI -2.36%  Xilinx Inc. /zigman2/quotes/209389378/composite XLNX -0.60%  will provide another read on the tech sector in the wake of Texas Instruments Inc.’s /zigman2/quotes/202237907/composite TXN -0.51%  recent report.

/zigman2/quotes/203165245/composite
US : U.S.: NYSE
$ 38.47
+0.66 +1.75%
Volume: 37.67M
Oct. 18, 2019 6:30p
P/E Ratio
16.16
Dividend Yield
5.30%
Market Cap
$281.10 billion
Rev. per Employee
$637,332
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/zigman2/quotes/203410047/composite
US : U.S.: NYSE
$ 130.89
-1.48 -1.12%
Volume: 8.70M
Oct. 18, 2019 6:30p
P/E Ratio
16.51
Dividend Yield
1.34%
Market Cap
$235.78 billion
Rev. per Employee
$295,532
loading...
/zigman2/quotes/200215692/composite
US : U.S.: NYSE
$ 9.58
+0.14 +1.48%
Volume: 17.18M
Oct. 18, 2019 6:30p
P/E Ratio
21.66
Dividend Yield
2.09%
Market Cap
$13.90 billion
Rev. per Employee
$707,724
loading...
/zigman2/quotes/203434128/composite
US : U.S.: NYSE
$ 130.71
-0.33 -0.25%
Volume: 4.33M
Oct. 18, 2019 6:30p
P/E Ratio
12.17
Dividend Yield
3.15%
Market Cap
$73.54 billion
Rev. per Employee
$526,173
loading...
/zigman2/quotes/208579720/composite
US : U.S.: NYSE
$ 344.00
-25.06 -6.79%
Volume: 13.57M
Oct. 18, 2019 6:30p
P/E Ratio
40.28
Dividend Yield
2.39%
Market Cap
$193.57 billion
Rev. per Employee
$660,961
loading...
/zigman2/quotes/205064656/composite
US : U.S.: Nasdaq
$ 185.85
-4.54 -2.38%
Volume: 16.88M
Oct. 18, 2019 4:00p
P/E Ratio
31.49
Dividend Yield
N/A
Market Cap
$530.22 billion
Rev. per Employee
$1.57M
loading...
/zigman2/quotes/203558040/composite
US : U.S.: Nasdaq
$ 256.95
-5.02 -1.92%
Volume: 5.75M
Oct. 18, 2019 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$46.03 billion
Rev. per Employee
$439,627
loading...
/zigman2/quotes/208911460/composite
US : U.S.: NYSE
$ 9.29
+0.18 +1.98%
Volume: 42.43M
Oct. 18, 2019 6:30p
P/E Ratio
16.84
Dividend Yield
6.46%
Market Cap
$37.07 billion
Rev. per Employee
$805,719
loading...
/zigman2/quotes/208054269/composite
US : U.S.: Nasdaq
$ 101.22
-2.41 -2.33%
Volume: 7.26M
Oct. 18, 2019 4:00p
P/E Ratio
48.13
Dividend Yield
N/A
Market Cap
$119.10 billion
Rev. per Employee
$710,138
loading...
/zigman2/quotes/200678442/composite
US : U.S.: Nasdaq
$ 536.27
-12.98 -2.36%
Volume: 306,753
Oct. 18, 2019 4:00p
P/E Ratio
1,735
Dividend Yield
N/A
Market Cap
$26.66 billion
Rev. per Employee
$198,875
loading...
/zigman2/quotes/209389378/composite
US : U.S.: Nasdaq
$ 94.34
-0.57 -0.60%
Volume: 2.23M
Oct. 18, 2019 4:00p
P/E Ratio
25.82
Dividend Yield
1.57%
Market Cap
$23.83 billion
Rev. per Employee
$723,353
loading...
/zigman2/quotes/202237907/composite
US : U.S.: Nasdaq
$ 129.46
-0.67 -0.51%
Volume: 4.13M
Oct. 18, 2019 4:00p
P/E Ratio
23.67
Dividend Yield
2.78%
Market Cap
$120.87 billion
Rev. per Employee
$528,105
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Emily Bary is a MarketWatch reporter based in New York.

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