AT&T took an estimated $2.8 billion hit in the second quarter attributed to the pandemic as the company copes with a lack of televised sporting events, shuttered movie theaters and increased costs to protect workers.
AT&T is planning and operating under the assumption that impacts from COVID will be the norm into next year, according to CEO John Stankey. The Dallas-based telecom company saw $41 billion in revenue in the second quarter, down from $45 billion for the same period last year.
The company broke out some of the costs associated with COVID-19 over the quarter. It estimates $320 million was spent to protect frontline workers and $510 million was lost to theater closures and an ongoing lack of live sports.
"Our solid execution and focus in a challenging environment delivered significant progress in the quarter, most notably the successful launch of HBO Max, resilient free cash flow and a strengthened balance sheet," Stankey said Thursday. "Our resilient cash from operations continues to support investments in growth areas, dividend payments and debt retirement."
Stankey was elevated to chief executive in late April when Randall Stephenson announced his retirement. The former WarnerMedia boss has had a significant presence in events addressing investors, but Stankey spoke on Thursday's earnings call as CEO for the first time since taking on the role July 1.
WarnerMedia's operations were "significantly impacted by COVID," according to the company.
Despite launching its flagship streaming service HBO Max in May, COVID had its largest impact in the company's WarnerMedia segment totaling $1.5 billion. HBO and HBO Max had about 36 million subscribers in the second quarter compared to 34.6 million at the end of 2019 prior to the launch of Max.
"We still have work to do," Stankey said.
With COVID shutting down content production, the company has been unable to get as many original titles onto the streaming platform as it would've wanted to keep new subscriber acquisition high.
"We're working on ways to resume production," Stankey said, adding he thinks production will restart next month.
AT&T TV's growth outperformed the company's expectations and HBO Max is "on target" to reach expectations outlined in the Fall, Stankey told investors.
The company began implementing a $6 billion cost saving initiative which involved reducing its workforce. The Communication Workers of America, which represents about 100,000 of the company's employees, announced it was cutting 3,400 technician and clerical jobs nationwide in June. It also decided to
AT&T temporarily closed retail storefronts due to the pandemic giving the company the opportunity to assess the cost benefit of each store, Stankey said.
"Some of our least productive stores won't reopen," Stankey said, adding that store traffic is bouncing back in some places.
AT&T continued to add more fiber customers though the pandemic, though its ability to enter customers homes limited installations to an extent, according to the company.
Stankey also told investors Thursday that it's "too early" to determine when the company would resume its share buyback program because it expects COVID-19 to be around "for some time."
