Little more than two decades old, Alpha’s YouTube service has been crowned the world’s largest media company by a prominent research firm.

Financial research firm MoffettNathanson has estimated that the streaming service, which reportedly earned $60 billion in revenue in 2025, actually brought in $62 billion last year, which would exceed The Walt Disney Co.’s $60.9 billion revenues earned in its media business in 2025.

MoffettNathanson had already crowned YouTube as the “new king of all media” and values the streaming service at an estimated $500-560 billion, which outpaces its closest rival, Netflix, with a current market cap of just under $509 billion.

YouTube earned more than $40 billion in ad revenue in 2025 and also takes in revenues from its subscription services, which include YouTube Premium, YouTube Music, NFL Sunday Ticket, and the YouTube TV virtual multichannel video service, which has about 10 million in subscriptions. YouTube says it has paid $100 billion to creators, music companies and media partners.

The researcher says the streaming service shows no signs of slowing down.

“Over the next few years, unlike almost any other asset we cover, we strongly believe that YouTube will be a major beneficiary of both the structural tailwinds and headwinds facing technology and media companies,” Michael Nathanson wrote in his report.

After eight years of declines, MoffettNathanson's new "Cord Cutting Monitor" for Q3 2025 shows that pay TV subscribers to linear TV packages rose by 303,000, the first reported rise in multichannel video programming distributor and virtual MVPD sub counts since 2017.

The last time subscriber counts rose was in Q4 2017, when they increased by 318,000, per data from MoffettNathanson. The slight increase in Q3 is a notable turnaround from the 2,455,000 pay TV sub losses in Q1 2025 and 1,054,000 in Q2 2025.

The analysts stressed that the increase was likely seasonal, as subscriber counts traditionally improve at the start of the football season.

Traditional pay TV operators like Comcast and Charter Communications continued to show declines, and the increases came from vMVPDs like YouTube TV. But MoffettNathanson offered more encouraging news for the pay TV sector with data showing that the rate of decline continued to slow.

“The rate of decline for traditional distributors improved for the fifth straight quarter,” the report stated. “While the rate of decline is still scary-high, it is unmistakably moderating. At Comcast, the trend has been improving for eight straight quarters; there, the rate of decline was the ‘slowest’—although no one would actually call it ‘slow’—since 2022. Even DirecTV and EchoStar have shown at least a little improvement. By far the biggest improvement, however—not just for traditional distribution but for the whole video industry—has come at Charter.”

The report also noted that “the vMVPDs are still growing” but “also more slowly.” The vMVPD category “is growing at a 4.6% annual rate. That’s unchanged versus each of the two prior quarters…even though it remains the slowest growth rate since the category was created,” the report said.

NEW YORK—The ballooning program costs of the streaming wars are coming to an end this year, with total media industry content cash spending forecast to grow by only 1% to $130.4 billion in 2023, way below the 14% spike in 2021 and the 24% jump in 2020 at the height of the streaming wars, estimates Robert Fishman, CFA, at MoffettNathanson securities. 

“If the launch of Amazon’s $1 billion Lord of the Rings series sounded like the peak of the bubble, that’s because it likely was,” he noted. “

In terms of content spending, Fishman expects Disney to once again lead the pack with $26.4 billion in FY 2023, followed by NBCUniversal ($22.5 billion), Warner Bros Discovery (18.4 billion) Paramount ($15.9 billion), Netflix ($15.2 billion), Amazon ($8.5 billion) and Apple $6.1 billion. 

“Now that most media companies have moved away from driving streaming subscriber growth at all costs, we expect to see a rationalization of content spending in the years ahead and a shift towards rebuilding free cash flow and achieving streaming profitability,” Fishman argued in a recent report. 

That means “after two years of strong double-digit content spending growth, we foresee a flattening in 2023,” he reported. “As more companies shift their focus away from solely subscriber growth, we would expect industry content spending to be relatively flat or even decline" in upcoming years. 

While those lower costs will help companies reduce losses, the trend won’t necessarily help everyone, given the decline in traditional TV revenue. 

“For each company, the ultimate question is whether slower growth in content spending will be able to grow streaming services large enough to offset the secular challenges facing the rest of the business?” he asked. “Unfortunately, we don’t think the answer is a positive one for companies with less scaled platforms today, especially given the accelerating pressures facing linear television….For the larger streaming players, we find that gross margins on a per-hour-viewed basis now approach those of traditional linear, although at much lower levels of revenue.  For the smaller players, despite outperformance on revenue per hour-consumed, we see far worse margins, calling into question their ability to drive further monetization from here. Ultimately, linear dollars are fading, but so too are DTC losses.  However, for those companies where the former is disappearing far faster than the latter, there is a critical need to address the path forward.”

In his analysis, Fishman predicts strong cash flow by fiscal year 2025 for Disney ($8.2 billion), Warner Bros. Discovery ($7.2 billion) and Netflix ($7.4 billion) but much weaker results for Paramount (only $0.6 billion in FY 2025) and AMC ($0.1 billion).

EL SEGUNDO, Calif.—DirecTV said this week that is laying off approximately 10% of its managerial staff, citing a downturn in subscriptions as more viewers cut the cord from pay TV.

“The entire pay-TV industry is impacted by the secular decline and the increasing rates to secure and distribute programming,” the company said in a statement. “We’re adjusting our operations costs to align with these changes and will continue to invest in new entertainment products and service enhancements.”

DirecTV has about 10,000 employees in total, according to credit rating agency Fitch Ratings, making it the third largest pay-TV provider in the U.S., behind Comcast and Charter.

While DirecTV, which was spun off from AT&T in 2021, no longer releases subscription numbers, it reportedly lost a half million subscribers in Q3 2022, according to Fitch, which said the downturn in subscriptions to the satellite provider have recently accelerated. DirecTV currently has approximately 13.3 million subscribers. 

DirecTV has been focusing more on its streaming service DirecTV Stream, which was rebranded from its U-Verse service last year. Although it still has a considerably small number of subscribers, a report from MoffetNathanson last year indicated that it had a 175% increase in streaming minutes.

The layoffs come at a particularly challenging time for the company, which on Sunday, broadcast its final NFL Sunday Ticket service. Starting in the 2023-2024 season that popular out-of-market service is moving to Google’s YouTube TV and YouTube Premium Channel in a $2B annual deal. 

Cord-cutting has accelerated in recent years—last month, MoffetNathanson reported that the trend hit new records in Q3 2022, with total pay TV distribution declining by 6.3%. 

After reporting record declines in pay TV subscriptions in Q2, 2022, MoffettNathanson’s Cord-Cutting Monitor has released new data showing that cord-cutting hit new records in Q3 2022, when total pay TV distribution declined by 6.3%. 

The drop in pay TV subs was slightly worse than the 6.2% slide seen in Q2 and the 5.2% decline seen a year ago in Q3 2022. 

MoffettNathan's definition of pay TV includes both traditional cable and satellite operators as well as newer vMVPDs like Fubo TV and YouTube TV. 

To put this in perspective, MoffettNathanson reported that the “Q3 loss of 655K subscribers is the largest third quarter loss ever; last year’s loss was…617K and the year before just 91K” in Q3 2020. 

“The decline in Q3 leaves pay TV penetration of occupied households including vMVPDs at 61.0% of households, a level last seen in 1993, a year before the arrival of satellite TV in the U.S.,” the researchers explain. 

While broadcasters may view this as a trend reaffirming the value of their over-the-air broadcasts, it also promises to create some serious financial problems for stations, which in recent years have relied heavily on retransmission consent payments from pay TV providers.

BIA has predicted that subscriber fees from retransmission consent agreements will increase from $14.55 billion in 2022 to $17.37 billion in 2030, growth that will be difficult to maintain if the pay TV ecosystem continues to collapse.

This also means that there are now about 34 million incremental homes that “exist entirely outside the cable network ecosystem,” and that the total number is 55 million, MoffettNathanson said. 

The growth of homes outside the pay TV ecosystem could also create problems for local and national broadcast TV advertising, which is already under pressure from streaming, by reducing potential audiences for programming. 

Historically, the rise of pay TV helped expand the reach of broadcast content, which in turn helped their advertising efforts in reaching larger audiences. 

More recently declining pay TV subscriptions have been coupled with higher levels of homes using TV antennas. Nielsen reported in Q4 2021 that 18.6 million homes used antennas, or 15% of the population. 

But those numbers are still much lower than the 55 million homes Moffett Nathanson said are now outside the pay TV ecosystem of both traditional pay TV cable operators and newer vMVPDs like Hulu Live or Sling TV.   

Cord-cutting continues to get worse, with the linear video industry suffering its biggest quarterly losses since COVID knocked out live sports and scripted programming, according to new figures from MoffettNathanson.

Traditional pay-TV distributors lost 9% of their subscribers year over year in the first quarter of 2022. The 9% rate of decline compared to 8.9% in the fourth quarter of 2021 and ties the worst level ever, set in Q1 2021.

Virtual MVPDs aren’t picking up lapsed pay-TV subscribers the way they used to either, contributing to a worsening picture for the traditional pay-TV bundle. In the first quarter, the conversion rate fell to 32.8% from 35.6% in the fourth quarter. 

When looking at traditional and virtual pay-TV distributors combined, subscribers were down 5.1% year over year, close to the all-time worst of 5.5% set in the second quarter of 2020, when COVID knocked out new scripted shows and most live sports.

In all, the linear video industry lost 2.1 million subscribers in the first quarter, the worst since Q1 2020.

Looking at company reports, MoffetNathanson said the biggest losers of subscribers in the first quarter were Comcast, down 511,00 and DirecTV down 496,000. DirecTV, spun off from AT&T last year, reported its latest subscriber numbers to bondholders and debt analysts.

Including estimates for some outfits that don’t publicly report numbers, MoffettNathanson said the Q1 performance left the linear TV business with 81.048 million subscribers.

Cable had 41.661 million subscribers, down 6.9%, satellite had 18.5 million subscribers, down 12%  and the telcos had 5.829 million subscribers, down 13.5%. 

Total traditional subscribers were 66.118 million, down 9% and the virtual MVPDs had 14.930 million subscribers, up 16.7%.

Separately YouTube TV reported on Tuesday that it now has more than 5 million subscribers.

“The rate of decline of the linear business is not something that ‘just happens.’ Many of the media companies have made conscious decisions to strip-mine their cable networks, shifting their best content to their streaming platforms,” note the research firm’s principals, Craig Moffett and Michael Nathanson.

“At the same time, they have raised prices relentlessly to offset declining viewership. Both strategies have alienated distributors, who are now more ambivalent than ever about trying to retain video subscribers who are themselves increasingly ambivalent about lower and lower quality video services for which they are asked to pay higher and higher prices,” Moffett and Nathanson said..

Several sports leagues have started to put games on streaming platforms, a trend that may accelerate, further hurting the linear TV business, which was expected to be supported by live programming including news as well as sports.

“Including vMVPDs, the rate of decline for linear video is hovering near its all-time worst levels. And the rate of decline for traditional distributors is the worst it has ever been. That’s not what one would expect if we were gliding towards a stable sports-and-news floor.”  

This article originally appeared on B+C.

Cable video customer losses, which improved over the past few quarters during the pandemic, are back on the rise, according to a Moody’s Investor Service report. 

While broadband subscriber growth exploded during the pandemic, lesser known was the impact stay-at-home orders had on pay TV video customer rolls. During Q3 2021, video losses tempered enough to cause a handful of analysts to rethink their forecasts. Wells Fargo Securities media analyst Steven Cahall modified his 2025 prediction for total pay TV video losses from 4.7 million to 4.3 million; MoffettNathanson senior analyst Craig Moffett expected cable video losses to spike to 2.4 million in 2021, falling to 1.98 million by 2025.

In his most recent report, Moody’s senior VP Jason Cuomo noted that the Video Replacement Rate (VRR) for the sector, a measure of the pace at which broadband is replacing traditional video subscriptions, fell to 1.5 times in 2021 from 2.21 times in the prior year. While that seems like a big improvement for video, it was more a factor of dramatically slower broadband growth. According to Cuomo’s report, broadband additions in Q4 slowed to 4.1% from 4.2% in Q3, while pay TV subscriber losses rose to 6.4% from 6.2% for the year.

In his report, Cuomo concluded that the temporary benefits from the pandemic are beginning to disappear and, coupled with newer subscribers taking only high-speed Internet services, should drive video’s decline higher as broadband additions even out. 

“Video losses will continue to be driven by weak attachment rates to broadband subscriptions among younger consumers, and a loss of existing subscribers because of ongoing cord-cutting by those switching to video streaming,” Cuomo wrote. “Rising penetration rates in residential and commercial markets, and gains from expansion of the footprint (new builds, overbuilds, and edge-outs) will continue to support broadband growth.”

While the two largest cable operators — Comcast and Charter Communications — had relatively strong increases in broadband subscribers (4.3% and 4.2%, respectively), their video losses varied widely. According to Moody’s, Comcast’s average video loss rate was -8.4%, while Charter’s was -2.4%. Comcast and Charter account for about 83% of cable video customers.

According to Moody’s, only three cable companies increased their VRRs in the period — Cable One (from 36.4 times to 85.1 times), Breezeline parent Cogeco Communications (from 7.5 times to 8.1 times) and WideOpenWest (from 0.7 times to 1.1 times). Charter had the biggest drop (from 54.7 times to 45.6 times) followed by Block Communications (from 1.8 to 1.4)  and Comcast (from 1.3 to 1.1).   

Revenue growth for the sector in Q4 was 4%, down from 7.2% in Q3 and 6.1% for the same period in the prior year. Cash flow growth fell to 5.9% in Q4, down from 9.6% in Q3 and 7.7% in Q4 2020. That, Cuomo wrote, was directionally consistent with the VRR trends. 

“We believe the slower growth is at least partially attributable to a difficult comparison to 2020 given the temporary benefit of the pandemic, which peaked during this time,” Cuomo wrote. “Growth, while at a lower level, is supported by the continued shift to lower-priced, higher-margin broadband (from higher-priced, but much lower-margin video).”

Broadband, he continued, accounted for about 54% of the total subscriber mix in Q4, and was nearly 2 times video subscribers in the period, up 20% from 1.7 times at the end of 2020. 

The future in which linear TV is driven almost exclusively by live sports, news and events has arrived, according to analyst Michael Nathanson after crunching numbers from Nielsen.

“Time spent on cable networks built on movies, syndicated TV and kids content has collapsed over the past two years as consumers and media companies adopted a streaming first mind-set, said Nathanson, senior analyst MoffettNathanson in a report Thursday. “As a result, it is clear as day, looking at a two-year stack, that live sports and news are rising in importance and value to linear stake-holders.

Nathanson found that the reach that cable and broadcast has evaporated, falling by double digits over the past few years, leaving mainly older viewers.

“There has been a dramatic reduction in the consumption of original scripted cable network content as audiences move to SVOD for that fare,” he said. “In the end, linear viewing appears headed to a world of 'live' programming while almost every other genre is served on demand.”

By the fourth quarter of 2021, 69% of broadcast network viewership was by people age 50 and up. On cable, 69% of consumption came from older viewers. Only 5% of broadcast network viewing was by people 17 or younger. On cable, it was 6%.

“Older viewers may be cutting the cord,” Nathanson noted, “but younger folks are increasingly asking the question, ‘What is a cord?’”

In 2021, C3 ratings for the big broadcast networks were flat, with NBC getting a boost from the summer Olympics.

On cable, Nathanson noted the news networks total day viewing–measured by C30– is down by between 27% and 33% after 2020’s intense news cycle. Kids networks Cartoon Network was down 34% and Nickelodeon dropped 23%. 

Overall cable network viewing was down 18% in 2022, with ESPN being the only top network to show an increase.

Reach has fallen even more over a five-year span starting in 2016. 

“CNN’s reach fell from 38% to just 17%,” Nathanson said. “While much of this can be chalked up to the cyclical nature of news and election cycles, the same cannot be said of AMC, FX, and Comedy Central, which face a real existential threat from streaming. Without either sports or news, these networks simply do not provide any of the content we believe will keep viewers tuning into linear.”

Networks have also seen big drops in length of tune–an important statistic to advertisers–since 2016. 

“Among the networks in company portfolios under our coverage, Investigation Discovery, MTV2 and TNT saw the biggest declines in length of tune, declining 18.3, 11.1, and 10.8 minutes, respectively, Nathanson said.  “Oxygen saw the biggest gain in length of tune from 2016 to 2021, increasing 13.8 minutes. Other big winners include other general entertainment channels such as Pop TV and Ovation.”

Even the top shows on cable were showing declines in viewership. Nathanson looked at the top 3 shows on each of the top 30 networks.

“Of the 60 shows on this list of the top three shows per cable network, only 14 increased in time viewed from2020 to 2021,” Nathanson noted. “NBA on TNT" experienced the largest increase in absolute time viewed in 2021. ESPN’s NCAA football coverage did third best. Paramount’s Yellowstone stands out as one of the few scripted shows to grow, near the top of the list, coming in fourth.”

As ratings have declined, linear ad revenues have remained relatively flat, Nathanson noted.

"Networks and affiliates have managed to stave off a complete collapse of their revenues by matching declining viewership with inflating ad prices, but given the dramatic drop in certain cable networks’ reach, this long-running trend clearly looks less sustainable from here,” he said.

NEW YORK—With media companies pivoting to streaming, analyst Michael Nathanson of MoffettNathanson is asking if streaming is really a better business than traditional pay-TV.

His conclusion: With Netflix the only mature streaming company to use as a model, domestic streaming isn’t all that much different in terms of profit margins from low-end basic cable and premium pay networks, said Nathanson in a report.

The profit picture gets better when you look at the international opportunity, where Netflix is a strong performer. 

“Netflix’s greatest asset—and the likely Achilles’ heel of many of their competitors—is indeed their international footprint, which should drive incremental profit and ROIC into the future. Absent a truly global ambition and subscriber base, we struggle to see how many of these nascent SVOD/AVOD services will profitably scale,” Nathanson said. 

Disney and Discovery are so far the only competitors that have shown the ability to successfully build business on their content around the world, he said.

In addition to international, advertising has the potential to make streaming a stronger business—something Netflix, the leader, seems determined to avoid.

Streaming technology makes it possible for media companies to sell advertising that is better targeted and therefore get better prices per impression. 

“The shift in revenue models from linear to DTC will most likely favor programmers that have high brand identities and a buffet of fresh content choices that requires minimal third-party marketing support while driving long-term pricing power,” Nathanson concluded.

“In addition, networks that can better effectively monetize advertisers by selling against individual targets rather than broad demographic reach should ultimately find the move to be accretive,” he added. “Lastly, outside the United States, as Netflix has proven, there is a greater revenue TAM available in OTT models than previously existed in the economics of linear TV. Very few media companies aside from Disney can check all these boxes at scale.“

NEW YORK—OTT services and platforms are approaching the same level of reach of broadcast and cable TV networks, and that could put them in a position to vie for major sports league rights, according to a new report from MoffettNathanson.

MoffettNathanson, looking at Nielsen data and other metrics, says that Netflix has a reach of 55% of U.S. TV households. By comparison, ABC has a reach of 58%, Fox 58%, NBC 60% and CBS 60%. Other major streamers—Amazon, Roku, Disney+, Pluto TV and Tubi—are lower, but on par with many linear cable services.

MoffettNathanson posits that in three years many premium streamers will be ahead of cable networks and closer to broadcast networks, which would allow them to effectively compete for high-priced programming, like sports.

"While we still believe that the NFL will remain a core broadcast product in the existing bundle, distribution of other sports rights, which we have previously taken for granted, could change meaningfully over the next set of renewals. These shifts could occur as media companies and leagues/teams are forced to react to declining viewership among younger audiences and the acceleration of vertically-owned network streaming services like ESPN+, HBO Max, Peacock and Paramount+," the report reads.

Highlighting the age factor, MoffettNathanson that 65% of all cable network viewers are now over the age of 50.

The shift in the market is already beginning, with MoffettNathanson pointing to recent announcements that NBCSN will be shut down and the WWE shuttering is SVOD service and shifting to Peacock.

For more information, download MoffettNathanson's full report.

NEW YORK—TV advertising experienced one heck of a comeback in the third quarter of 2020 after a record downturn in the second quarter, according to a new report from MoffettNathanson, blowing past the research company’s own projections and looking to continue into the fourth quarter of the year.

In Q2 2020, during the early days of the COVID-19 pandemic, MoffettNathanson reported a decline of 28% in aggregate TV advertising. This most recent report shows that Q3 saw an aggregate TV advertising increase of 3%, about +1,900 bps better than what MoffettNathanson originally predicted back in March. Based on these findings, MoffettNathanson now expects that growth to continue into Q4 at about a +2% clip, which would be about +600 bps better than it initially estimated.

When looking for why such a turnaround has occurred, MoffettNathanson said that it found three primary factors.

First, the third quarter brought an unprecedented return of every major sport, including the NBA and NHL playoffs, the start of the MLB season and major PGA tournaments. These events, which in a typical year would primarily take place in Q2, were shifted to Q3 because of the pandemic. The return of sports brought high CPM (cost per thousand impressions) inventory to the advertising market.

The second factor was a surge in local, regional and national ad spending in the run up to the 2020 general election. MoffettNathanson estimates that political ad spending for TV was up 75% from 2016, especially in key swing states. The news cycle also helped boost ratings for news networks like CNN, MSNBC and Fox, which in turn drove monetization, the company said.

The final factor was the return of brands that had pulled advertising during Q2.

PLUS: Broadcast TV's Dominance in Political Ads Will Persist, Gray TV's LaPlatney Contends

With sports back on their normal schedule and reports of vaccines that could be ready sometime in 2021, MoffettNathanson believes the TV ad market will continue to be strong over the next three quarters, particularly with the postponed Summer Olympics on the way.

“Relative to our estimates at the beginning of the pandemic in 1Q 2020, the recovery in digital and TV ad growth has been much stronger than expected,” the report reads. “... We had expected TV to benefit from political spending at the end of the year, but had not anticipated such a rapid return to positive growth by 3Q.”

An additional finding from MoffettNathanson’s report noted that outside of digital, TV was the only media type that did not post a loss in advertising year-over-year. 

NEW YORK—After what was a devastating second quarter for pay-TV—video customer losses reached a new record, fueled by the pandemic and the overall shift to streaming services—influential media analyst Craig Moffett believes that the worst is yet to come. 

Pay-TV shed about 1.8 million subscribers in Q2, fueled by continued heavy losses at DirecTV and Dish Network, as well as pandemic-fueled declines at Comcast and telco TV providers. Comcast more than doubled its video losses in Q2 to 478,000 (from about 224,000 in the prior year), while DirecTV continued to bleed customers, losing 871,000 subscribers in the period. 

Charter Communications was the only bright spot on the video front in the period, adding about 102,000 video customers. But Moffett, principal and senior analyst at MoffettNathanson, doesn’t expect that trend to continue. In a note to clients, he said that the industry weathered yet another record subscriber decline and it shows no signs of letting up.

According to Moffett’s estimates, pay-TV subscribers fell 7.7% in Q2 (8.3% if pandemic-related nonpay customers are excluded), the worst ever for the sector. And it comes after eight consecutive quarters of worst-ever losses. 

That forebodes a scary trend for the business.     

“At this rate of decline (somewhere between 7.7% and 8.3% per year), the traditional pay-TV business would disappear entirely in another 12 years,” Moffett wrote, adding that just two years ago the rate of decline was 3.3%, while last year fell at a 5.4% clip.

Cable operators have shifted their focus toward broadband, which enjoyed record growth in Q2. Charter added 850,000 high-speed internet customers in the period, 50% above the prior quarter, while Comcast and Altice USA also had record growth in that segment. Broadband growth is expected to continue. And, at the same time, more customers are opting for broadband-only service, using that connection to access Netflix, Amazon Prime Video, Hulu, Disney Plus and Peacock and driving a stake through the heart of the video business.  

Adding to the confusion, Moffett said, is the uncertainty around the Keep America Connected pledge, under which most cable operators agreed not to disconnect broadband customers during the pandemic for lack of payment. While no operators are being accused of skewing numbers, it is difficult to determine how many of those customers will convert to paying subscribers once the pandemic subsides.

Then there’s the question of new household formation, which according to U.S. Census Bureau statistics, reached 2.28 million additions in Q2. That, too, could be skewed by the pandemic, Moffett said, boosted in part by a moratorium on rental evictions, people occupying their seasonal second homes, or just a product of the “impossible environment for data collection.”

Other analysts expect video subscriber erosion to continue. In a research note, Evercore ISI media analyst Vijay Jayant predicted Comcast would lose around 400,000 video customers in Q3, while broadband subscribers would rise by 525,000.

At the Goldman Sachs Communacopia conference last month, Comcast chairman and CEO Brian Roberts said the company was on pace to break records in broadband additions, adding that it was already “well over 500,000” broadband additions in mid-September.

In a research note, Sanford Bernstein media analyst Peter Supino said the focus on broadband will help drive margins higher. “Comcast’s excellent internet sub results reinforce our ‘losing to win’ theme: that the confluence of robust internet and relentless video subscriber losses means structurally improving margins and ROIC,” Supino wrote of Comcast’s Q2 performance. 

Altice USA, which surprised the industry with its $7.8 billion unsolicited bid (with Rogers Communications) for Canadian telecom company Cogeco on Sept. 2, also is expected to see continued video erosion. At press time, there had been little movement on that bid since Cogeco’s controlling shareholder flat-out rejected it in September, but the pace of video declines highlights the need to expand the footprint. Altice USA, which has the highest broadband penetration rate in the industry in its metropolitan New York area, lost about 35,000 video subscribers in Q2, but added a record 70,000 broadband customers, more than three times consensus expectations of 21,000 additions.

Supino expects video losses to level out at Altice over the next few years. In a research note, he estimated video losses would hover between 30,000 and 40,000 through Q1 2024. He estimated broadband growth would be around 20,000 to 40,000 per quarter during the same time frame.

DTC: THE LAST NAIL

While broadband rolls rise, the shift to streaming video continues at an accelerated pace. And Moffett believes the transformation of the content business to a direct-to-consumer (DTC) model will drive the final nail in traditional pay-TV’s coffin. In his note, Moffett predicted that content redirection, the practice of taking A-list shows from traditional networks and offering them DTC, is the second wave that will ultimately make pay-TV as we currently know it moot.

The analyst warned that as networks are redirecting content while their channels are still under contract with traditional distributors—with escalators that help partially offset subscriber declines—that train could stop running come renewal time. Moffett estimated that overall affiliate fees dropped 3% in Q2 for the first time ever. Over the next four years, he predicted that 0% affiliate-fee growth would be the new normal for cable networks. 

“The pay TV ecosystem is well and truly unraveling,” Moffett wrote.

NEW YORK—Pay-TV, like so many other industries at this point in time, is taking a significant hit in part because of the coronavirus pandemic. In MoffettNathanson’s “Q1 2020 Cord-Cutting Monitor” report, the data shows that the first quarter of 2020 brought upon a record number of pay-TV subscription losses.

Traditional pay-TV subscriptions fell by 1.8 million in Q1, the worst quarterly results on record, according to MoffettNathanson. This also brought the annual rate of decline to -7.6%, another record.

Satellite TV was hit the hardest, with the third consecutive quarter of more than 1 million subscriptions lost, resulting in an annual rate of decline of -14.3%. MoffettNathanson says that number would likely be worse if its numbers were able to include lost bars, restaurants and hotels that temporarily suspended Dish Network subscriptions. Cable, meanwhile, saw about 600,000 subscribers cut the cord, bringing its annual growth to -4%, another record low.

The 63% of households with pay-TV services is the lowest it has been since 1995. MoffettNathanson also says that are currently as many non-subscribing households (46 million) as there were pay-TV subscribers in 1988.

The unemployment impact of COVID-19 is definitely contributing to these statistics, but so is the loss of live sports content on the air. As a result, MoffettNathanson projects that things will get worse in Q2.

It’s not just traditional pay-TV subscriptions seeing significant losses. MoffettNathanson found that around 341,000 subscribers dropped vMVPD services in Q1. AT&T TV Now, Sling TV and fuboTV are all expected to have lost subscribers, according to MoffettNathanson. Services that have seen growth have been small—Hulu Live TV has added about 100,000 subscribers, a deceleration, and YouTube TV, which MoffettNathanson says is the fastest growing vMVPD service, was unable to make a dent in the losses.

A huge part of this is that when Sony’s PlayStation Vue service shut down at the end of January, MoffettNathanson reports that its nearly 500,000 subscribers did not add a new service to replace it.

Total pay-TV subscriptions, both traditional and vMVPD, are decreasing at a rate of 5.3% per year.

Many companies have or are planning to launch streaming services that are gaining popularity among viewers, even in these current times. But, as MoffettNathanson puts it, “it is increasingly clear that as consumers climb into these lifeboats, they are leaving the (sinking) motherships behind.” MoffettNathanson does not believe that these new streaming services will be able to match the profitability that traditional and vMVPD services would have.

“When one’s ‘last line of defense’ (vMVPDs) has been breached, it is not unreasonable to ask … has the war now been lost?,” MoffettNathanson’s report reads. “What’s at stake is nothing less than the viability of the traditional cable network model writ large.”

NEW YORK—Reported pay-TV numbers among some of the biggest providers—Comcast, AT&T, Charter Communications and Verizon; Dish Network and Atlice USA are still unreported—in the fourth quarter of 2019 were not strong. However, growth among virtual MVPDs, specifically Hulu Live and YouTube TV, helped reduce some of those loses, per a new report from MoffetNathanson.

In the report “U.S. Media: Get Those Life Boats Ready,” it is shown that the four aforementioned pay-TV providers lost nearly 1.5 million subscribers combined in Q4 2019; AT&T lost 907,000 subscribers by itself.

Yet, while the report’s author, Michael Nathanson, said he did not have enough data for precise numbers for Hulu Live and YouTube TV in Q4 2019, the research says they experienced “exceptionally strong” growth. With their addition, pay-TV’s recession in that quarter would improve from the record -6.8% to -3.5%.

TVT’s sister publication B&C has the full story.

NEW YORK—The story of the ugly duckling is not currently applicable to the pay-TV market based on recent numbers detailing the loss of subscribers—rather than turning into a beautiful swan, the pay-TV market is getting uglier and uglier.

This is based on the third quarter 2019 report from MoffettNathanson on media earnings. Having described the second quarter of the year as “freaking ugly” at the time, the latest results have the analysts taking a deep dive into the dictionary to find a more accurate descriptor.

With the four video distributors that reported as part of MoffettNathanson’s research—AT&T, Charter, Comcast and Verizon—it was revealed that 1.74 million video subscribers left their services in the third quarter, more than 240,000 than was originally estimated. Of the four, AT&T saw the largest exodus, as the company reported that it lost 1.1 million premium video subscribers and an additional 200,000 for its AT&T TV Now service (formerly DirecTV Now). That represents 80% of the departing video subscribers.

As a result, the rate of traditional cord-cutting has hit a new low of -6.2% over the last year. Even the cushion of cord-cutting helping to build the virtual MVPD market has become less certain, with MoffettNathanson believing that price hikes for these services will keep them from stemming the bleeding as the overall cord-cutting rate has also reached a new low of -3.8%. Just 15 months ago that rate was under -1%, per MoffettNathanson.

For cable affiliate fees, this will all contribute to a growth of 3% in the third quarter, -300 basis points slower than the same period last year. That rate is expected to continue to decelerate in Q4.

Things aren’t looking to much better for advertising. With NBCU and Turner Networks reporting, the domestic national is in the negative for Q3. MoffettNathanson expects that to hold true when other companies report in the coming weeks.

“Since AT&T provided initial guidance of massive subscriber losses in early September, media investors have been bracing for an even uglier quarter than 2Q, which we labelled “freaking ugly,” MoffettNathanson wrote in its report. “Well, with earnings now in the books for Comcast, AT&T, Verizon and Charter, we can definitively say that the early read on traditional cord-cutting is uglier than ever before.”

NEW YORK—Recently released earnings reports from AT&T, Comcast, Charter Communications and Dish that show continued losses of subscribers to traditional TV services has led equity research company MoffettNathanson to predict that cord cutting numbers from the second quarter are projected to reach an all-time high of 5.5%.

Craig Moffett, MoffettNathanson's principal analyst, described the result from the second quarter earnings reports "freaking ugly."

However, the report was concluded before Dish officially released its earnings report, which showed a lost of its subscribers to only be 79,000 when initial estimates expected losses closer to 350,000.

Read the full story on TVT's sister publication Multichannel News. 

NEW YORK—Media and telecom researcher MoffettNathanson is suggesting that it could be time for traditional pay TV services to grab a lifejacket, as the first quarter of 2019 brought about the largest number of cord-cutters yet.

The combined losses from cable, satellite and Telco TV equaled 1.4 million subscribers, 75% worse than over the same period in 2018. It was also the largest rate of decline in terms of percentages at -4.8%.

However, despite hitting a new low, MoffettNathanson’s researchers make the argument that that is not the key takeaway. While the number of people cutting the cord is increasing, those signing up for virtual multichannel video programming distributors (vMVPDs) is not growing as expected, having slowed “significantly” in Q1. As a result, total distribution for cable networks saw its worst-ever decline of 1.9%.

While traditional services continue to decline, MoffettNathanson looks to past history to forecast that media companies will raise rates to make up for its losses, which could further accelerate declines. But it’s not a net gain for vMVPDs. Many have added more networks into its lineups—something MoffettNathanson said they have been “forced” to do.

“The more the vMVPDs mirror the channel bloat of the traditional MVPDs, the more their growth, too, will stall,” the report reads. “And the more the programmers will have to raise prices to fill the gaps.”

To read the full report, visit MoffettNathanson.com.