AT&T’s third-quarter results topped Wall Street estimates despite an expected loss of HBO Max subscribers in the U.S. due to a shift away from Amazon Prime Video Channels.

The telecom giant reported total revenue of $39.9 billion, down nearly 6%. The company blamed the downturn on the divestiture of DirecTV, which took effect July 31. Diluted earnings per share of 82 cents more than doubled from 2020. Analysts surveyed by Refinitiv had expected revenue of $39.1 billion (some other consensus figures were higher, meaning the revenue slightly missed) and earnings of 78 cents.

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HBO Max, which began expanding globally in June, has now reached 69.4 million global subscribers when combined with HBO, up from 67.5 million in the previous quarter. Domestically, it retreated from 47 million subscribers last quarter to 45.2 million in the period ending September 30. The drop in customers, while highly unusual in the cutthroat overall streaming competition, had been signaled months ago when the company pushed to reposition its streaming presence on Amazon. A year ago, HBO Max and HBO had 38 million subscribers.

Instead of being packaged as part of Amazon’s channels hub, which widens exposure but keeps customer data under Amazon’s control, HBO Max is now offered as a stand-alone app on Amazon Fire TV. The new status means that WarnerMedia and AT&T (its parent until a pending merger with Discovery gains regulatory approval) can reap more customer information as the company continues to transition from wholesaling to direct retail. HBO Max, which launched in May 2020, did not secure distribution on Amazon until the end of 2020. Along with Roku, Amazon is a major streaming gateway, serving more than 50 million U.S. households.

In its earnings release, AT&T said the streaming service will reach the high end of its forecast for 70 million to 73 million subscribers by the end of 2021. (The forecast for 2025 is 120 million and 150 million worldwide.)

WarnerMedia revenue rose 14% from a year ago, reaching $8.4 billion, with AT&T crediting subscription growth and content licensing. Direct-to-consumer subscription revenue climbed more than 25%. Average revenue per user, or ARPU, was at $11.82 for domestic HBO Max and HBO, dipping slightly from $11.90 in the prior quarter. ARPU in many regions outside of the U.S. tends to be significantly lower.

HBO Max trails new rival Disney+ and incumbent Netflix by a significant margin in terms of total subscribers. Disney’s forecast by 2024 calls for roughly twice as many paying customers. Nevertheless, execs at WarnerMedia and AT&T have maintained that their service will yield significant profit for the company in the years to come.

Along with the global expansion last June, a cheaper, ad-supported tier was added as a way to lower barriers to new customers, especially those without pay-TV subscriptions. Historically, HBO was never able to discount its offerings, even when it launched as a stand-alone streaming service back in 2015, because of strict distribution commitments to pay-TV partners. The numbers are also not apples-to-apples because millions of customers who already were paying for HBO gained access to HBO Max once it went live. In 2020, AT&T reported the number of “activations” but eventually switched to an overall subscription number across linear and streaming.

WarnerMedia reported revenue from “content and other” categories of $3.1 billion, up 32% due to higher TV licensing and the recovery of theatrical box office. Advertising fell 12% to $1.4 billion due to the later arrival of the NBA season in the 2020 quarter because of Covid-19 and lower political ad spending in the 2021 period.

AT&T continues to struggle to pay down its debt, which stood at $179 billion as of September 30. Its wireless business continues to show strength, with 928,000 customers signing up for its main service in the quarter.

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