He noted the trial date of March 19 and reiterated the company’s upbeat view of its chances. “We remain very confident we will complete this merger,” he said.
With the Time Warner drama put to the side and not explored in any of the analysts’ questions, the call about the company’s solid fourth-quarter results verged at times on an infomercial for the “major public policy achievements” of President Donald Trump’s time in office. (It was not lost to many listening in that the burst of bullishness couldn’t hurt in terms of dealing with the President, whose resentment of CNN is seen as the root cause of the Department of Justice lawsuit — something the White House denies.)
Chief among those “achievements” are tax reform and regulatory easing. John Stephens, AT&T’s CFO, said the company booked a $20 billion gain in 2017 due to reduced tax liability and will see a $3.4 billion increase in free cash flow in 2018 because of the new tax law. The FCC’s decision to roll back Title II restrictions and net neutrality rules are further boosts to AT&T’s prospects, execs said.
Beyond those tax and regulatory wins, Stephenson said the company’s video business has made significant strides. DirecTV Now, the skinny-bundle TV service launched in November 2016, added 368,000 subscribers and now has 1.2 million overall. Those gains more than offset ongoing declines on the traditional side.
“Since the day we bought DirecTV [in 2014], we assumed that traditional linear video would be in a declining mode,” Stephenson said. “We wanted to be in the leadership position when it comes to enabling the consumption of video across mobile devices.” The migration of customers from older to newer technology is a familiar exercise, he added. “We run these transitions all the time,” he said. “We are standing up a video product that we’re convinced will give us growth for the next few years.”
The subscriber base for DirecTV Now, Stephens said, remains about 50% “cord-nevers” (people who have never had traditional cable or satellite service) and 50% cord-cutters or cord-shavers.