Cable Companies Suffer Rough Q4, Lose 1.7 Million Customers
After a shaky Q4, traditional pay-TV providers hemorrhaged another 319,000 net cable subscribers, according to estimates by MoffetNathanson analyst Craig Moffett who stated it as "the fastest rate of decline on record."
"With the results now in from all of the largest operators, it is clear that cord-cutting of legacy distribution services -- that is, without including OTT-delivered virtual MVPD bundles like Sling TV and DirecTV Now (and soon, YouTube TV) -- has at last meaningfully accelerated," Moffett said. "While there admittedly remain a few smaller operators left to report, the pay-TV business (as defined by traditional providers) ended 2016 shrinking at 1.7% per year, its fastest quarterly acceleration on record."
As a whole, the industry saw a net loss of 1.7 million subscribers in 2016, a 1.7% shrinkage, and nearly doubled the 1.1 million lost by the end of 2015.
While a few smaller operators haven't reported their numbers, primary providers have reported increasing losses. AT&T reported a positive growth of 200,000 customers for the new IP-delivered DirecTV Now but lost 262,000 to the legacy U-verse platform in Q4.
Dish Network claimed that AT&T's DirecTV Now's positive growth had no impact on its v-MVPD platform, Sling TV. The positive numbers were Dish Networks first reported customer growth in 10 quarters, adding 28,000 customers. Moffets report credits the increase to Sling TV gains and "not the return to growth of the core Dish Satellite platform."
The lone increase is credited to Comcast, who added 80,000 video customers in the last quarter. This is a different narrative from the 36,000 they lost in 2015, but the No. 1 cable operator attributed the turnaround to their advanced X1 video platform.
Comcast CEO Neil Smit informed investors during an earnings call last month that 936,000 new X1 homes were added in Q4 alone, "bringing penetration of the platform up to 48% of Comcast's footprint," for an increase of 30% from Q1 of 2015.
Charter, the nation's second-biggest cable company, lost 51,000, in part to low conversions of acquired Time Warner Cable subscribers.
Losses are assumed to grow steadily as streaming services like Sling TV become normalized. Additions of live TV services, like YouTube Live, and Hulu's anticipated streaming service will only further the damage to traditional cable options.