Originally Published by AT&T.
“It was an exciting quarter for AT&T as we completed the acquisition of Time Warner on June 14 and created a modern media company built around premium content, 170 million direct-to-customer relationships, advertising technology and high-speed networks,” said Randall Stephenson, AT&T chairman and CEO.
“Time Warner joins us coming off an impressive second-quarter. Turner turned in solid subscription and advertising revenue growth, Warner Bros. is in high gear with a record number of series in production, and HBO delivered strong subscriber revenue growth.
“Since we closed the Time Warner deal, we’ve also announced an agreement to acquire ad-tech leader AppNexus, which will be an important step to strengthen our leadership in advanced TV advertising.
“Our goal is to reshape the way media and entertainment work for consumers, and you will see us continue to do exactly that.”
AT&T Inc. reported solid wireless results in the second quarter, including postpaid phone gains, continued strong prepaid phone growth and stable postpaid churn. On a GAAP basis, service revenue declined; however, on a comparable basis service revenue grew. Including the acquisition of Time Warner in mid-June, AT&T reported consolidated revenue growth on a comparable basis, which offset pressure from its entertainment and business segments, and strong earnings and free cash flow growth.
- Strong subscriber gains:
– 3.8 million total wireless net adds
– 3.1 million in U.S., driven by connected devices and prepaid
– 756,000 in Mexico
– 219,000 total video net adds (U.S. and Latin America) - U.S. wireless results:
– Service revenue growth on a comparable basis
– 46,000 postpaid phone net adds with continued strong year-over-year improvement
– Continued prepaid growth with 356,000 phone net adds
– Nearly 400,000 branded smartphones added to base
– Second-quarter postpaid phone churn of 0.82% - Entertainment Group results:
– 342,000 DIRECTV NOW net adds to reach more than 1.8 million subscribers
– 80,000 total video net adds; total video customer base stable with DIRECTV NOW; AT&T WatchTV launched
– 76,000 IP broadband net adds; 23,000 total broadband net adds; more than 9 million customer locations passed with fiber
– AdWorks continues double-digit revenue growth - Time Warner acquisition closed on June 14; full second-quarter results include:
– HBO and Turner year-over-year subscription revenue growth
– Turner ad revenues up 3%
– Record number of series in production at Warner Bros.
– 166 Primetime Emmy Awards nominations
Consolidated Financial Results
AT&T adopted new U.S. accounting standards as required that deal with revenue recognition (ASC 606), post-employment benefit costs and certain cash receipts on installment receivables. These changes impact the company’s income statements and cash flows. With the adoption of ASC 606, the company made a policy decision to record Universal Service Fees (USF) and other regulatory fees on a net basis. The company is providing comparable results in addition to GAAP to help investors better understand the impact on financials from ASC 606 and the policy decision. Historical income statements and cash flows have been recast to show only the impact of the adoption of the other two accounting standards.
The company’s consolidated results include 16 days of Time Warner results for the second quarter. Time Warner’s total second-quarter results on a historical basis are located on AT&T’s Investor Relations website. Pro forma schedules are expected to be filed in August.
AT&T’s consolidated revenues for the second quarter totaled $39.0 billion versus $39.8 billion in the year-ago quarter, primarily due to the impact of ASC 606 which included netting of approximately $900 million of USF with operating expenses. On a comparative basis, declines in domestic video and legacy wireline services were offset by adding approximately $1.1 billion from an>