By Arriana McLymore and Neha Malara
(Reuters) - AT&T Inc (NYSE:T) missed fourth-quarter revenue estimates on Wednesday as another decline in subscriptions to satellite TV provider DirecTV overshadowed an increase in monthly phone customers.
AT&T has spent a combined $134 billion on DirecTV and Time Warner to transform itself into a media company, but is struggling to stem the loss of valuable satellite subscribers as audiences switch to streaming services.
Analysts at New Street Research said in a note that although AT&T's wireless subscriber growth was strong, "everything else" was worse than expected.
AT&T shares were down 3.1% to $37.37 in morning trading on the New York Stock Exchange.
Revenue from the entertainment segment, which includes DirecTV, fell 6.1% from the year-ago quarter to $11.23 billion.
AT&T said it lost 945,000 "premium" TV subscribers during the fourth quarter, including from DirecTV, and a smaller number of cable TV subscribers. Analysts at Cowen had estimated AT&T would lose a net 1 million premium TV customers, leaving the company with 19.4 million.
To counter the loss of customers to streaming platforms like Netflix Inc (NASDAQ:NFLX) and Amazon.com (NASDAQ:AMZN) Inc's Prime, AT&T plans to launch its own HBO Max streaming platform in May.
It said it added a net 229,000 new mobile phone customers in the quarter. Analysts had estimated an additional 145,000 phone subscribers, according to research firm FactSet.
AT&T reaffirmed its 2020 guidance, with plans to invest $1.5 billion to $2 billion on streaming content in 2020, and an additional $1 billion in 2021 and 2022.
Total operating revenue in the quarter ended Dec. 31 fell 2.4% to $46.82 billion. Analysts were expecting $46.96 billion, according to IBES data from Refinitiv.
The WarnerMedia segment, which includes HBO, reported revenue of $8.92 billion, missing analysts' estimates of $9.03 billion.
The company said it stopped licensing content, including the popular sitcom "Friends," to other streaming services like Netflix as the launch of HBO Max nears.
Although the licensing decision cut WarnerMedia's revenue, Chief Financial Officer John Stephens said the investment "will make HBO Max even stronger, and pay off in the long term."
Net income attributable to AT&T fell to $2.39 billion, or 33 cents per share, from $4.86 billion, or 66 cents per share, a year earlier.
AT&T reported a profit of 89 cents per share, beating Wall Street estimates of 87 cents per share.
AT&T paid down $7.6 billion in debt during the fourth quarter, leaving $151 billion of net debt.