Shares of TV providers drop as AT&T warns of video losses

AT&T: Darned If They Do, Darned If They Don't

Investors in traditional TV providers are reeling as companies from AT&T Inc.to Viacom Inc. fail to stop the desertion of customers lured away by cheaper entertainment options such as Netflix and Snapchat.

That includes a gain of 300,000 customers in DirecTV Now, an online cable-like service that is cheaper than traditional TV. AT&T said it lost 90,000 video subscribers in the U.S.in the third quarter, a steeper drop than the same period past year.

According to Leichtman Research Group, the top 11 providers representing more than 95% of the US pay-TV market lost around 374,000 customers in the third quarter.

Signs are emerging that the pay-TV ecosystem is in full-blown crisis mode.

While it said there were several reasons, including changing credit standards for its new members and hurricanes, its comment that said video net losses had been driven by the increased competition in traditional pay television markets as well as over the top services. Charter Communications Inc., the second-biggest cable USA company, is now fighting with Viacom over a distribution deal that could lead to a blackout of Viacom's channels for millions of its customers. AT&T is also planning to acquire HBO and CNN owner Time Warner Inc.in an $85.4 billion deal.

Barring a major fourth-quarter comeback, 2017 is on course to be the worst year for conventional pay-TV subscriber losses in history, surpassing last year's 1.7 million, according to Bloomberg Intelligence.

With video subscriptions falling, AT&T Chief Executive Officer Randall Stephenson is under pressure to prove he can keep people paying for TV. Previous year saw 1.7 million conventional pay-TV subscriber losses across the board, excluding online services like DirecTV Now.

AT&T stock is down 4 percent to $36.62 in afternoon trading. Shares of rival satellite TV provider Dish and cable companies Comcast and Charter also declined.

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