Oct 31, 2017

Big Cable on pace to lose 1 million subscribers this quarter

"With five out of the top seven publicly traded linear pay TV platforms, including the top three, reporting customer numbers, it appears the industry's record-bad third-quarter subscriber losses could indeed surpass 1 million users, as some analysts have predicted," Fierce Cable reports.

The big picture: We're still waiting on Dish and Altice earnings, but so far 632,000 Pay-TV subscriber losses have been reported in Q3:

  • Verizon: Lost 18,000 Fios TV users
  • AT&T: Lost 251,000 for DirecTV and 134,000 for U-verse
  • Comcast: Lost 125,000 Pay-TV subscribers
  • Charter: Lost 104,000 Pay-TV subscribers (Legacy Charter lost 11,000; Time Warner lost ~86,000; Bright House lost 7,000)

Why it matters: Pay-TV losses are forcing the top cable, satellite and video providers to double down on other products and services.

  • Broadband services, particularly wireless broadband, for the most part is a higher-margin business than video, and margins only increase as consumers double down on streaming digital video. Comcast, Verizon and AT&T executives all discussed ways Pay-TV declines are leading to higher broadband revenues through increased video streaming.Comcast CEO and Chairman Brian Roberts said on last week's Q3 earnings, "We've anticipated this shift that's coming ... I think we've taken our innovation machine and pointed it as well now to broadband and broadband-only homes, and I think you'll see more of that coming in the future."AT&T SVP and CFO John Stephens said on last week's earnings call that the number of TV-and-wireless bundles have grown by 20% since the DTV (DirecTV) deal closed.Verizon EVP and CFO Matthew Ellis confirmed to investors two weeks ago that it still intends to launch its fixed wireless broadband offering in 2018.
  • Data and advertising: The MVPD's with content investments are hoping an expanded data set will lead them to more lucrative digital advertising opportunities. Verizon: With the addition of Oath, Verizon's Matthew Ellis says the company's addressable market "has expanded from millions of wireless and wireline customers to about one billion global content consumers."AT&T: AT&T's John Stephens says its advertising business is growing in "double digits," largely due to an increase in data-based digital TV ad buying. He suggested on its earnings call that "the indications are that this can be effective" for Time Warner's business (when/if the future merger goes through), based on what it has seen in its ad tech business and its entertainment group.
  • Streaming video: AT&T's DirecTV Now seems to be leading the pack. DirectTV added nearly 300,000 subscribers in Q3, bringing its total to nearly 800,000 customers in less than a year.

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