AT&T Hikes Online-TV Prices Up to 30% in Second Boost This Year

(Bloomberg) -- AT&T TV Now, the carrier’s online television service, is raising prices again.

Notices are going out this week telling about 1.3 million customers of AT&T Inc. that prices are rising as much as 30% starting next month. Subscribers who were paying $50 a month for the “Plus” package will see prices climb to $65, while those paying $70 for the 65-channel “Max” package will be charged $80 a month.

It’s the second price hike this year and highlights what has been AT&T’s top priority -- to widen margins and reduce a debt load that ballooned to as much as $195 billion after the acquisitions of DirecTV and Time Warner. To ease that burden, AT&T has retreated from competitive pricing and said goodbye to more than 2.3 million TV subscribers in the past year.

The Dallas-based company is also under pressure from the activist investor Elliott Management Corp. to sell some businesses and boost returns.

“We’re adjusting our pricing to reflect the cost to deliver content to our customers,” AT&T said Friday in a statement.

The subscriber exodus, which reached nearly 1 million TV customers in the second quarter, will likely accelerate as higher prices kick in. Analysts on average expect AT&T to lose 671,000 TV subscribers when the company reports third-quarter financial results on Oct. 28. The price changes don’t apply to customers of DirecTV or AT&T’s U-verse TV.

AT&T TV Now, previously called DirecTV Now, is a package of live TV channels delivered online. The idea is to attract cord cutters, who are abandoning traditional satellite and cable packages.

But the field has turned more competitive, with AT&T TV Now facing off against Sling TV, Google’s YouTube TV and Hulu’s live service, which together have racked up millions of customers. All of those services also compete with video-on-demand offerings like Netflix and Amazon Prime.

For AT&T customers getting price-increase notifications, the company offered two choices: pay up or cancel.

“As always, you can review your options for packages and prices, or if you do not wish to continue your subscription, you can cancel any time,” AT&T told customers in an email.

--With assistance from Vincent Cignarella.

To contact the reporters on this story: Scott Moritz in New York at smoritz6@bloomberg.net;Kamaron Leach in New York at kleach6@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Rob Golum

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