With Comcast (NASDAQ: CMCSA), Time Warner Cable (NYSE: TWC) and Charter Communications (NASDAQ: CHTR) all reporting their third-quarter earnings this week, analysts continue to believe that the pay-TV sector will lose hundreds of thousands of customers -- but not as many as in the second quarter.
"Once Comcast and TWC are done, we will have a better sense of things," Evercore analyst Vijay Jayant said in an email to FierceCable. Earlier this month, Jayant predicted the entire pay-TV sector will report third-quarter video customer losses of around 360,000.
Jayant was one of several analysts making third-quarter predictions, after the pay-TV industry lost a record 630,000 subs in the second quarter.
Specifically, Evercore predicted that Comcast will lose 60,000 customers during the quarter, TWC will lose 40,000 and Charter will lose 10,000 customers during the third quarter.
"We believe cable continues to experience moderating subscriber losses as a result of viable customer value propositions ... and that relative to 3Q14, the trajectory of the decline appears to have moderated. Further, while cable companies lost market share to the Telcos in 2014, we believe these market share losses have already begun to reverse course in 1H15, and that this will continue into the second half of this year," Evercore said in a recent note to investors. "Our projections call for roughly 400k video subscriber losses for the second half of 2015, which represents an additional 75 bps loss in penetration of US households assuming household formations continue to grow at ~1% per year."
"The good news is that Q3 sounds better, but we are still looking at heavier losses relative to prior year," said Wells Fargo analyst Marci Ryvicker in her preview note to investors. She forecasts the sector to lose around 282,000 video customers, around 100,000 more than last year.
Last week, Verizon (NYSE: VZ) said it gained 42,000 video customers to its FiOS service, while AT&T (NYSE: T) reported gains of 26,000 customers to its DirecTV platform. However, AT&T reported steep losses of 92,000 customers for its U-verse video service.
So far, the pay-TV sector stands at 24,000 customers lost, with Comcast set to report its numbers Tuesday morning. DirecTV was the only platform to improve on its year-ago performance.
"Verizon was in line, and AT&T was worse -- it was hard to predict because of the merger. But it's still too early," Jayant said.
"We expect to see a rebound led by cable in the third quarter," Jayant said in Evercore's forecast. "And that while the quarter may not be as strong as the third quarters of 2013 or 2014, it will nonetheless show an improvement over the second quarter (beyond typical seasonality)."
- read this CNN report
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