MoffettNathanson analyst Craig Moffett predicted that the pay-TV industry will continue to lose subscribers during the second quarter, led by 120,000 net losses of video subscribers at industry leader Comcast. Overall, Moffett predicted video subscriber growth of -0.5 percent in the second quarter, essentially flat from the first quarter but down significantly from the same quarter a year ago.
"Seasonality won't help," Moffett added in a report released today. "The second quarter is always the weakest of the year. We estimate that the pay TV sector shed 321,000 subscribers in Q2 of last year. This year, we expect that number to be markedly worse."
Further, Moffett noted that recently launched streaming alternatives such as Sling TV, Sony PlayStation Vue and HBO Now could have a significant impact to the industry in the second quarter, even though many have only been available for just a few months.
"The evidence for cord-cutting (or cord-nevering) is all the more compelling when one factors in what the U.S. Census Bureau reports to have been a sharp spike in new household formation over the past six months," Moffett noted. "After accounting for new household ,formation the pace of cord-cutting and cord-nevering appears to have accelerated from ~500K per year six months ago to more than 1.6M annually as of Q1."
As for specific cable companies in the second quarter, Moffett predicts that Comcast will lose 120,000 video customers in the second quarter, but will offset that with a gain of 221,000 new broadband customers. Similarly, Moffett predicts Charter Communications will report the loss of 33,000 video subscribers and a gain of 63,000 broadband customers. Time Warner Cable, which Charter is working to acquire, could lose around 79,000 video customers and gain 131,000 broadband customers in the period, the analyst said.
Finally, Moffett said Cablevision could lose 34,000 video customers in the second quarter while gaining 13,000 broadband customers.
Satellite TV, Moffett believes, has finally entered an era of recession.
"We're bearish about satellite," he wrote. "AT&T will not doubt try to find ways to sustain DirecTV's subscriber growth, but its margins are likely to suffer. Dish network has been losing subscribers and margins for years, and we don't expect that to change."
The nation's cable companies are scheduled to report their second quarter results in the next few weeks. As part of their response to the loss of video subscribers, many are turning to OTT options and skinny cable bundles to retain customers who want less expensive monthly service bills. Indeed, Comcast this week promised to roll out a new service called Stream that will offer broadcast TV channels alongside HBO for $15 per month to its Xfinity customers.
- read this MoffettNathanson report (sub. req.)
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