NEW YORK, New York – Third-quarter revenue reports for media companies’ Pay-TV services are in, and renowned media analyst Michael Nathanson had chosen the phrase “worse than freaking ugly” to describe the situation detailed in the reports.
This is as opposed to simply “freaking ugly,” which is how he described the condition of US Pay-TV services as he previewed it last quarter.
In a recent research note, however, he said that they would need to find an “even more negative” phrase to describe the market trends as they stand in the third quarter.
This comment came after the losses incurred to the combined subscriber bases of Comcast, AT&T, among others, numbered at 240,000 more than what he had projected, bringing the total up to 1.74 million total subscribers gone. This means cord-cutting services are growing by 5.2%.
Further, Nathanson expressed skepticism about Virtual Multichannel Video Programming Distributors’ (VMVPDs) capability to bolster the standing of Pay-TV services, especially after a general price hike.
Even with VMPVDs like YouTube TV put into the equation, Nathanson projects the subscriber loss of Pay-TV services to be 3.8%, a far cry from his projection of less than 1% loss 15 months ago.
Nathanson predicts a slower cable affiliate fee growth as well – at 3% opposed to the 6% growth he predicted a year ago.
The explanation he gave was it is due to the “lagging nature” of the revenue reporting cycle in media relative to distributors, leading to a net deceleration of fee growth starting next quarter.
The same negative estimations pervade his statements on advertising revenues as well. Based on reports released by NBCU and AT&T, he says that the deficit is too great to be mitigated even by the steady growth of CPMs in 3Q, which, according to the analyst, is “saying something.”
Nathanson finished by stating that the fiscal trajectory of Pay-TV services will continue to be negative until cord-cutting trends plateau.
According to him, these trends have been destabilizing cable TV’s hold on the market since the start of 2Q, and show no signs of stopping at present.