The top 6 cable, satellite and telco pay TV operators in Q4 2018: Ranking Comcast, DirecTV, Charter and more

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After a tumultuous third quarter with fairly dramatic losses for cable operators, telecoms and satellite providers alike, cable stabilized somewhat this quarter. (Getty/monsitj)

The fourth-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 according to metrics including subscriber growth and market share.

After a tumultuous third quarter with fairly dramatic losses for cable operators, telecoms and satellite providers alike, cable stabilized somewhat this quarter. Altice USA and Comcast managed to reduce their subscriber losses year over year while Charter improved sequentially. But the story was much different for satellite operators DirecTV and Dish Network, both of which gave back massive amounts of video subscribers.

The fourth quarter wasn’t exactly kind to DirecTV Now either, as the leading virtual MVPD witnessed its first massive subscriber runoff just as it was starting to catch up with Sling TV.

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How the top six U.S. publicly traded pay TV operators performed in the fourth quarter in video (ranking by subscribers)

Operator Video subscribers (mil.) Net additions (thousands)
1. AT&T* 24.52 (658)
2. Comcast 20.96 (29)
3. Charter 16.1 (36)
4. Dish Network* 12.32 (334)
5. Verizon 4.5 (46)
6. Altice USA 3.31 (15)

*AT&T's totals include U-verse and DirecTV Now, and Dish's include Sling TV subscribers.

The vMVPD growth narrative takes a downward turn

Traditional pay TV subscriber losses are a fact of life now for distributors but virtual MVPDs looked like a decent way to patch the leak or, at least, slow it down a little. But this quarter saw the dam burst open for one streaming TV service.

DirecTV Now, in an effort to purge promotional pricing, lost 267,000 subscribers during the fourth quarter. The upside for AT&T is that DirecTV Now ARPU improved by $10 sequentially, but the losses were still shocking. In the meantime, Dish Network’s Sling TV only managed to add another 47,000 subscribers during the fourth quarter.

Analyst firm MoffettNathanson said that vMVPDs beside those top two may have fared better during the quarter but still didn’t do enough to shore up the losses.

“While our visibility into numbers for the other vMVPDs isn’t good, it appears that growth for the group as a whole took a huge hit. YouTube TV and Hulu Live TV are still growing rapidly—indeed, our sources suggest they did very well in the fourth quarter—and smaller operators like fuboTV and Philo are, in aggregate, starting to matter, but it appears that these smaller providers simply aren’t growing fast enough, individually or collectively, to make up for the declines elsewhere,” MoffettNathanson wrote.

MoffettNathanson chart
(MoffettNathanson)

MoffettNathanson estimated that Hulu with Live TV ended 2018 with approximately 1.7 million subscribers and YouTube TV finished out the year with more than 1 million. The firm estimated that Hulu added about 500,000 subscribers and YouTube TV added about 400,000 subscribers in the fourth quarter.

The firm said that competition from other entertainment-focused streaming services may be impacting overall growth for vMVPDs, but that it could also be an issue of “pent-up demand” being satisfied.

“We have warned in the past that some portion of the vMVPD subscribers seen over the past few years were being sold to customers who had cut the cord years earlier, when vMVPDs didn’t yet exist,” wrote MoffettNathanson. “It could be that that one-time boost to the market is now running off, making visible what is in reality a much lower underlying conversion rate.”

MoffettNathanson chart

U.S. satellite is falling out of orbit

On paper, 2018 wasn’t a particularly great year for U.S. pay TV industry, which lost a combined 2.57 million subscribers, according to the newest informitv Multiscreen Index.

But upon closer examination it’s revealed that satellite accounted for an overwhelming majority of those losses: DirecTV and Dish combined for 2.36 million subscribers losses last year. Though it’s still early in 2019 and things could improve this year for DirecTV and Dish, they may not want to hold their breath.

As the New York Post pointed out last week, there are forces at work against satellite TV. First, both services raised their prices recently, which typically causes customer churn to increase. But there are also competing technologies like 5G which could soon make satellite TV less of a necessity in rural and remote locations.

“The arrival of 5G [wireless broadband] networks—with speeds up to 100 times greater than they are now—will give consumers another reason why satellite broadcasting doesn’t cut it,” Chris Wagner, managing partner at OTT Advisors, told the publication.

AT&T CEO Randall Stephenson may still be defending his company’s $67 billion purchase of DirecTV, but that position is looking less invulnerable in the years to come.

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