Cord-Cutting Will Reach -3.8% in Q3, Analyst Says

Rate has accelerated from just under -1% in only 15 months, according to MoffettNathanson
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Led by continued massive customer losses at AT&T, cord-cutting for U.S. pay TV services will reach an attrition rate of -3.8% in the third quarter once all operator reports are in, MoffettNathanson predicts.

This represents a continued acceleration of cord cutting, which stood at just under -1% just 15 months ago.

Factoring out virtual live-streamed services, the loss rate for traditional cable, satellite and telco pay TV services will reach -6.2%, the equity research firm predicts.

The dour forecast comes after AT&T, Comcast, Charter Communications and Verizon each reported significant pay TV customer losses for Q3—AT&T alone shed more than 1.1 million traditional subscribers during the quarter.

“Pay TV subscriber declines have missed our firm’s estimates by -243K so far this earnings season, driven almost entirely by worse than expected results from AT&T,” report author Michael Nathanson said. Through four earnings reports, aggregate video subs are down -1.74 million, and that doesn’t include Dish Network, which we also expect to lose subscribers in the quarter. Even if Hulu with Live TV and YouTube TV crush expectations this quarter, we still expect to see dramatic continued acceleration in the rate of pay TV subscriber declines.”

Related: AT&T’s Stephens: DirecTV Losses ‘Have Peaked’

Speaking to investment analysts earlier this week during AT&T’s third-quarter earnings call, company CFO John Stephens said customer losses for the DirecTV satellite TV platform have “peaked.

“We had about 225,000 net losses due to programming blackouts,” Stephens added. “Our gross adds were down about 400,000 due to new, higher intro pricing and credit thresholds, as well as more targeted promotions, and we continue to work through customers rolling off two-year price locks. Those video losses also impacted our broadband numbers, especially our bundled customers.”

MoffettNathanson chart 10.30.19

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