AT&T Adds 202,000 U-verse Pay TV Subscribers in Second Quarter

NEW YORK - Telecom giant ATT reported a net gain of 202,000 subscribers to its U-verse pay TV service on Thursday as it kicked off the latest quarterly earnings season for TV distributors. That was slightly below the year-ago addition of 209,000 customers, but in line with many Wall Street estimates. The gain brought the company's overall U-verse TV subscriber base to 3.4 million as of June 30. Sanford C. Bernstein analyst *Craig Moffett* said the quarterly TV net additions were "not far from consensus [expectations] of 199,000 in what is traditionally a seasonally soft quarter." Barclays Capital analyst *James Ratcliffe* also said the gains were in line with expectations. Miller Tabak analyst *David Joyce* had predicted 220,000 TV user additions, but the actual result didn't make him change his predictions for overall pay TV subscriber growth in the latest quarter. Joyce projects industry-wide net adds of 97,000 in the second quarter driven by gains for ATT and Verizon (+170,000), as well as satellite TV firms DirecTV (+100,000) and Dish Network (+50,000). But he once again expects cable operators to post subscriber losses, which he estimates at 317,000 for publicly traded and 443,000 for privately held companies. The user growth he expects would make for the third consecutive quarter of pay TV subscriber increases after two quarters of declines last year kicked off a debate over whether some consumers may be dropping their cable packages to substitute them with online video options. On Wednesday, SNL Kagan predicted that online video will replace pay TV service in 4.5 million homes, or 4 percent of U.S. households, by year-end in the latest contribution to the cord cutting debate. When including bundled satellite TV subscribers, ATT added only 168,000 pay TV subscribers in the second quarter as analysts highlighted a loss of 34,000 users under satellite co-marketing deals.