Bulletin: AT&T's First-Quarter Results Highlight Risk To Its Credit Quality

NEW YORK (S&P Global Ratings) April 24, 2020--S&P Global Ratings said today that AT&T Inc. has sufficient near-term cushion at the 'BBB' issuer-credit rating to absorb earnings declines in some of its business segments. 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. During the first quarter of 2020, total Warner Media revenue and EBITDA fell 13% and 23%, respectively, year-over-year, driven by a 24% drop in Turner advertising revenue, primarily due to the cancellation

...April 24, 2020 NEW YORK (S&P Global Ratings) April 24, 2020--S&P Global Ratings said today that AT&T Inc. has sufficient near-term cushion at the '###' issuer-credit rating to absorb earnings declines in some of its business segments. COVID-19 and the resultant recession highlight the increased risk from exposure to more cyclical businesses acquired through debt-financed acquisitions over the past five years. While AT&T's mobility business held up well during the first quarter of 2020 despite the impact of COVID-19, its video segment and Warner Media suffered steep declines in revenue and cash flow. Video customer losses were in line with previous quarters at about 1 million while video revenue declined 8.5% from the year-ago period. Despite modest 2% revenue growth from high-margin broadband services, EBITDA for the entertainment segment fell 6.3%. We believe that revenue from video services could be hurt by an acceleration of cord cutting with no sports offerings and consumers looking...

Bulletin