AT&T Inc.

When AT&T acquired Warner Media in 2018, management believed these assets would offset some of the revenue declines in its secularly challenged business segments while also rejuvenating growth in other business lines, including mobility. However, the impact of COVID-19 and the sharp macroeconomic contraction will hurt both advertising and theatrical revenue at Warner Media. Our current base case forecast includes a 10%-12% decline in theatrical revenue and 17%-20% drop in Turner advertising revenue in 2020. While improving theatrical revenue and cash flow trends somewhat depend on renewed production and the timing of theaters opening again, the shutdown of content production spending is a partial offset to cash flow this year. We believe the company could also elect to distribute some

...COVID-19 and a global recession will contribute to weaker top line trends and lower EBITDA in 2020. While we expect AT&T's mobility business will be somewhat insulated, many of its other business lines could be hurt by a weaker economy. We expect video customer losses will accelerate throughout the year as more consumers cut the cord in favor of less expensive streaming options as unemployment rises. And, AT&T's video package is very sports-centric so the value of its linear video product might be less appealing if sports remain canceled for an extended period. Despite growth its fiber-based broadband service, AT&T continues to lose IP broadband and digital subscriber line (DSL) customers, which will also limit its ability to stem revenue declines in this segment. When AT&T acquired Warner Media in 2018, management believed these assets would offset some of the revenue declines in its secularly challenged business segments while also rejuvenating growth in other business lines, including...

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