AT&T reports earnings

It’s looking “pretty good” for AT&T after the company released second quarter results after the market closed. Earnings per share are $0.81 compared to last year’s $0.63. Considering they did a lot this quarter in acquiring Time Warner and launching AT&T Watch, that’s not a bad reward.

If you’re interested in digging through a whole bunch of financials that I won’t ever understand, you can find them at AT&T’s web site.

All good news?

The company did report 219,000 net video additions from the US and Latin America. They also said that the total of net additions for the Entertainment Group (which includes U-Verse, DIRECTV US, DIRECTV NOW, and AT&T Watch) were 80,000 but as they disclosed that DIRECTV NOW added 342,000 subscribers on its own, that points to a loss in the satellite TV side of the house.

In addition, Wall Street was betting on even better results, so after the bell the stock actually fell a bit.

Honestly though

I think you have to look at AT&T, and the Entertainment Group in specific, in a very big picture way. There are going to be some people who will look at these losses as proof that traditional pay television is a dead man walking. However, that opinion just doesn’t hold up. The Entertainment Group has 25.5 million video subscribers and only about 2 million of those are streaming at this point.

Yeah, the streaming side is growing and the satellite side is shrinking, but is that really the most critical way to look at things? Take a look at the way things panned out 15 years or so ago for phone and cable companies. There was a time that local landline phone service was the bread and butter for communications companies. Then the internet came and people didn’t care about landline service. It took about a decade for things to shake out and now those same companies are bigger and more profitable than ever offering internet service and content. One of those companies that was never expected to make it past the loss of landline services was Southwestern Bell. That company went through a whole lot of twists and turns, eventually buying out a former corporate parent and renaming itself… AT&T.

It seems to me was are going through a similar transition where you can’t just be looking at satellite television. AT&T is a powerhouse with wireless service, landline internet, content, and of course satellite. The point is to build all of that together and that’s precisely what they are doing. They are taking a strong legacy business — satellite — that probably doesn’t have a huge upside growth potential and are tending it carefully. At the same time they’re offering other innovative ways to get content, including making it in house.

It’s all ending up to be a really strong package and for those who want to be naysayers, it means you have to ignore a lot of facts in order for your worldview to make sense. For those of us who are AT&T fans, it’s still a pretty good day, no question about that.