By TREY WILLIAMS
Credit: Getty images
Traditional pay TV, including cable and satellite, was supposed to lose more than a million subscribers during the second quarter. The industry was supposed to experience accelerated rates of cord-cutting. There was supposed to be pandemonium. It was supposed to be a terrible quarter.
That didn’t happened.
Pay TV lost 976,000 subscribers during the second quarter, according to data from S&P Global Market Intelligence. That is still a record number of losses, but below the symbolic 1 million threshold and the projection by analysts of as many as 1.3 million losses heading into second-quarter earnings season.
A lot of the credit for better-than-expected numbers belongs to new live-streaming TV services.
“Traditional video losses came in better than expected. Accounting for the [virtual multichannel video programming distributors], pay TV losses in the second quarter were similar to 2016,” Evercore analyst Vijay Jayant wrote in a recent note to investors. “More importantly, the year-over-year increase in traditional video losses in the second quarter was much lower than the year-over-year acceleration in video losses we saw in the first quarter.”
The 976,000 decline in pay-TV subscribers compares to a 765,000 decline during the same quarter a year ago. Adding in the growth of virtual multichannel video programming distributors, such as AT&T Inc.’s T, -1.65% DirecTV Now, Dish Network Corp.’s DISH, -2.60% Sling TV and Alphabet Inc.-owned GOOGL, -1.76% Google’s YouTube TV, the industry lost 610,000 subscribers, compared with 635,000 last year, according to Jayant.
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As a sub group, cable did see a slight uptick in subscriber losses. All the cable operators lost subscribers, with Comcast Corp.’s CMCSA, -2.35% losses widening to 45,000, compared with 21,000 last year, and Charter Communications Inc.CHTR, -1.85% improving losses slightly, only losing 90,000, compared with 152,000 in 2016. Jayant estimates the other cable operators lost 157,000 subscribers, compared with 82,000 last year.
Satellite operators had a surprisingly weak quarter, compared with the year prior, with video subscriber losses of 450,000. In 2016, while cable was suffering declines, satellite was a source of strength for the pay-TV industry.
DirecTV, owned by AT&T, lost 156,000 subscribers in the quarter after adding 342,000 last year. AT&T lost a total 351,000 traditional TV subscribers, including the 195,000 who dropped U-verse. However, AT&T was a prime example during the second quarter of the potential in the increasing number of live internet TV services.
The company’s DirecTV Now service, which AT&T said has nearly half a million subscribers since launching last year, added 152,000 subscribers, almost completely wiping out DirecTV’s satellite losses, and helping to offset AT&T’s video losses. Accounting for DirecTV Now’s additions in the quarter, AT&T’s net video losses were 199,000, rather than 351,000.
However, according to S&P Global Market Intelligence, the trajectory of subscriber losses in pay TV continues to point to an unprecedented annual decline.