Huge Q2 pay-TV customer losses not a 'cord-cutting inflection,' Evercore says

The more than 600,000 pay-TV customers lost in the second quarter does not represent a "cord-cutting inflection point," but rather the confluence of strategic decisions made by individual operators, said Evercore ISI analyst Vijay Jayant.

Much of the disarray, he said, was caused by distraction over M&A. "Comcast (NASDAQ: CMCSA) was dropping its bid for Time Warner Cable (NYSE: TWC), Charter Communications (NASDAQ: CHTR) was [merging] a deal for TWC, and AT&T (NYSE: T) and DirecTV were finalizing their combination," Jayant explained in a note to investors.

"Moreover, Verizon FiOS (NYSE: VZ) was not aggressive with offers and Dish was pre-occupied with the launch of its over-the-top service, Sling TV, whose gains are not included in the aforementioned losses," the analyst added. 

Jayant expects the sector to rebound in the third quarter.

"While the quarter may not be as strong as the third quarters of 2013 and 2014, it will nonetheless show an improvement over the second quarter, beyond typical seasonality," he said. 

The analyst estimates third-quarter subscriber losses in the range of 360,000 compared to around 165,000 in the third quarter of 2014. 

"We believe there was a heavy promotional emphasis on triple-play bundling aimed at 'Traditionals,' and on skinny bundles and single-play promotions aimed at millennials that likely led to success in subscriber trends," Jayant added. 

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