THE GOOD NEWS
While the costs should not be a major surprise to anyone, there was good news that is being completely glossed over that you need to focus on. Thanks to an uptick in business, the company believes the impact of these aforementioned costs will not impact 2017 guidance as a whole. The company still sees margin expansion and free cash flow of $18 billion, which is paramount to the dividend being raised as we opined last week. The reiterated guidance is in part due to a better than expected Q2, but also to organic growth in Q3 in the DirecTV mobile side of the equation.
When the company reports Q3, it anticipates about 300,000 new DirecTV NOW subscribers to be added, continuing the mobile revolution that we have referenced many times in our work. This good news was partially offset by the fact that video subscribers dipped by 90,000, but we want to be clear that this decline is reflective of a trend we have highlighted that shows a move to mobile and away from traditional pay TV. The streaming model is the future as we have stated before. Of course, some of the declines in subscribers were from hurricane related losses in the markets of Texas and Florida as well, but there may be more issues. This leads us into what we will be watching for in for a comeback