While customer declines for U.S. operators of linear pay-TV platforms didn’t reach the 1.2 million-plus depths feared by some investment analysts, they were still record bad, hitting an estimated 941,000 subscribers, according to MoffettNathanson analyst Craig Moffett.
The rate of decline for these services reached 2.7%, close to the predicted 2.8%, Moffett added. The rate worsened from 2.5% in the first quarter. However, the acceleration of decline slowed, with the first quarter’s 2.5% rate having quickened from 1.8% in the fourth quarter of 2016.
Losses were clouded by a number of factors, not the least of which was the emerging virtual MVPD market, with operators like Dish Network not disclosing how many customers its traditional satellite business is losing and how many subscribers its virtual service, Sling TV, is gaining.
“To put it politely, the data sucks,” Moffett said in his note to investors this morning. “Some vMVPDs report data, some don’t. Some include free subscribers still in their promotional windows, and some don’t. Some are included in recent periods but not in older ones. So take the vMVPD data with a grain of salt.”
Analysts had pegged the second-quarter attrition to exceed 1 million, with Wells Fargo’s Marci Ryvicker suggesting it could go as high as 1.28 million.
Biggest losers in the second quarter were the satellite platforms. AT&T said last week that its linear DirecTV service lost 156,000 users in the second quarter, while Dish Network reported total customer losses of 196,000—gains by Dish’s Sling TV likely offset much bigger declines by the core satellite TV business.
AT&T, meanwhile, said that its sinking U-verse platform lost another 195,000 TV users.
Losses exceeded expectations in cable, with Charter Communications reporting only 90,000 lost video customers compared to the 140,000 to 158,000 that had been forecast. However, Charter changed a key accounting methodology, keeping on the books thousands of legacy Bright House Networks customers who place their service in dormant status while checking out of their Florida vacation homes after the winter months.
“If there was any surprise, it was only that the carnage this quarter came up short of the worst-case scenarios,” Moffett added. “In fact, the rate of acceleration in the decline actually got a bit better.”