Rate of Cord-Cutting Grows as Pay-TV Continues to Shed Subscribers

MONTEREY, CA–Cable and satellite TV providers continue to shed subscribers as the rate of cord-cutting accelerate in the third quarter, according to several new research reports.

According to MoffettNathanson, more than 1 million viewers severed their subscriptions to cable and satellite TV services in Q3, the most ever in a quarterly earnings period. The four largest U.S. pay-TV providers--AT&T (DirecTV), Comcast, DISH and Charter lost 887,000 subscribers in the quarter, with the satellite TV providers taking the brunt of the loss.

Media Research firm Kagan released similar figures, noting that cable lost 1.1 million subscribers year-to-date so far, their worst performance at the three-quarter mark since 2014. Satellite providers lost 726,000 subscribers in Q3 and traditional telco subscriptions fell by 94,000, with Verizon alone shedding 63,000 subs alone during Q3. The current number of multichannel video program subscribers stands at 91 million, including 88.2 million residential customers, according to Kagan.

Kagan’s quarterly analysis now includes total virtual multichannel subscriptions from services such as Sling TV, DirecTV Now, Hulu with Live TV, YouTube TV and PlayStation Vue. The combined virtual platforms gained an estimated 2.1 million subs in the trailing 9 months, compared a decline of 2.8 million in the traditional segment.

Leichtman Research Group reported a loss of approximately 975,000 subscribers for the pay-TV market in Q3 compared to a pro forma loss of 410,000 in Q3 2017. Among “skinny bundles,” LRG focused on those provided by AT&T/DirecTV and DISH, noting that its Sling TV and DIRECTV NOW services added only 75,000 subscribers in Q3, compared to about 530,000 net adds in Q3 2017. This was the fewest in any quarter since their debut.

Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. noted the danger such trends mean for DBS providers in particular.

“Satellite TV services had more combined net losses in 3Q 2018 than in any previous quarter,” he said. “These net losses were largely driven by corporate strategies focused on acquiring and retaining more profitable subscribers (as well as a programming carriage issue between DISH and Univision). A related emphasis on improving the profitability of the satellite TV company’s Internet-delivered flanker brands reduced net quarterly adds in the segment, resulting in vMVPDs not helping to mitigate overall pay-TV losses to the degree they had in recent quarter

In addition to lost subscription revenues, cord-cutting is hitting pay-TV’s advertising base as well. eMarketer recently downgraded its TV ad revenue estimates for 2018, decreasing the rate of growth to just .5 percent to $71.65 billion, down from the previously estimated $72.72 billion. eMarketer predicts that TV’s share of total media ad spending in the US will drop to 34.9 percent, and is expected to fall below 30 percent by 2021.

Tom Butts

Tom has covered the broadcast technology market for the past 25 years, including three years handling member communications for the National Association of Broadcasters followed by a year as editor of Video Technology News and DTV Business executive newsletters for Phillips Publishing. In 1999 he launched digitalbroadcasting.com for internet B2B portal Verticalnet. He is also a charter member of the CTA's Academy of Digital TV Pioneers. Since 2001, he has been editor-in-chief of TV Tech (www.tvtech.com), the leading source of news and information on broadcast and related media technology and is a frequent contributor and moderator to the brand’s Tech Leadership events.