Despite the widespread disruption caused by the coronavirus pandemic, the U.S. cable industry should remain “relatively stable,” according to Moody’s.
Analyst Jason Cuomo said the U.S. cable sector has averaged 2.2% better growth than the U.S. GDP, and that during the last economic downturn in 2018-2019, the sector averaged 8.2% better revenue growth than the U.S. GDP.
“Based on these reference points, the directional trends pre-crisis, and our expectation for increased broadband demand, we believe U.S. cable revenue growth is likely to out-perform U.S. GDP by a substantial margin,” he wrote in a research note.
Moody’s pointed toward a recent Nielsen report suggesting the coronavirus could lead to a 60% increase in content consumption as further evidence that traditional TV will get a boost.
“Spikes in viewership of cable news is further support, and helps offset sports cancellations, which is the most watched live TV content and draws the highest advertising rates,” Cuomo wrote.
With movie theaters shut down amid the crisis, Moody’s anticipates a rise in viewing for entertainment programming along with a spike in spending on subscription and on-demand services.
“During this temporary shutdown, we expect people to spend their movie budgets on over-the-top (OTT) streaming services offered by subscription video-on-demand (SVOD) providers, advertising video-on-demand (AVOD), and direct-to-consumer (DTC) providers as well as linear, video-on-demand services offered by cable operators,” he wrote.
Indeed, Comcast this week said linear video consumption increased 4 hours to 64 hours per week and that video-on-demand is nearing “record highs,” up 25% year over year. The company also said there has been a 38% increase in streaming and web video consumption. AT&T late last week released some data showing a similar rise in video consumption patterns on its video services, including DirecTV and AT&T TV. The company live viewing was up 15%, and free video-on-demand was up nearly 25% March 16-20 compared to March 2-6.
Still, companies like Comcast/NBCUniversal are being hurt in divisions outside of cable. Comcast CEO Brian Roberts said his company is setting aside $500 million to support employees affected by the coronavirus due to the closure of theme parks and delayed release of theatrical films.