The first-quarter earnings season has wrapped up for the top publicly traded pay TV operators in the U.S., and it's time to break down the numbers. FierceVideo has put together an overview of how the top cable, satellite and telco pay TV operators performed.
Another quarter, another run of large-scale subscriber losses for the biggest MVPDs and virtual MVPDs. Charter, Comcast, DirecTV and Dish Network all posted substantial pay TV subscriber losses and vMVPDs like Sling TV and DirecTV Now didn't do much to staunch the bleeding.
As has been the story for months now, satellite TV absorbed the brunt of the punishment last quarter.
How the top six U.S. publicly traded pay TV operators performed in the first quarter in video (ranking by subscribers.)
|Operators||Video subscribers (mil.)||Net additions (thousands)|
|4. Dish Network*||12.06||(259)|
|6. Altice USA||3.3||(10)|
*AT&T's totals include U-verse and DirecTV Now, and Dish's include Sling TV subscribers.
Video continues to decline and cable companies feel fine
Cord cutting became demonstrably worse in the first quarter. Analyst firm MoffettNathanson estimated the traditional video subscriber losses totaled 1.4 million, the worst quarter ever and 75% worse than just one year ago. The annual rate of decline for traditional video subscriber bases across pay TV accelerated to 4.8%
“…By any standard, this was the worst quarter on record for traditional (linear) pay TV,” wrote Craig Moffett in a research report.
But, cable operators including Altice USA, Cable One, Charter and Comcast have all saw their stock rise since the beginning of the year. Moffett said this may be due to both investors and operators realizing that video losses are “relatively painless.” This new attitude could serve to reinforce many cable operators’ belief that low-value video subscriptions are no longer worth chasing. In this scenario, where cable operators stop defending video, “the wheels will be far more likely to come off the traditional video business.”
Virtual MVPDs keep losing luster
Virtual MVPDs like DirecTV Now and Sling TV have been a growth story for pay TV to hold up during the ongoing cord-cutting dialog. But the shine of streaming TV is wearing off. DirecTV Now lost subscribers for the second straight quarter, and Sling TV only managed to add 7,000 new subscribers during the first quarter. According to MoffettNathanson, Hulu with Live TV and YouTube TV grew but at a slower pace.
The firm estimated that the vMVPD space added approximately 563,000 new subscribers during the quarter – lead by Hulu which added around 400,000 – and now has about 8 million subscribers combined. Those growth totals are well behind the 1.4 million traditional video subscribers lost during the last quarter and MoffettNathanson estimated that vMVPDs only recaptured about 40% of the people who cut the cord.
“We have warned frequently in these pages in the past that the close to 100% conversion rates that obtained through most of 2018 didn’t look sustainable. Well, now they are falling,” Moffett wrote.
That decline in conversion rate is obviously bad for pay TV providers, but it’s also terrible news for cable network groups that rely on distribution to make money.