Cord-Cutting Slows In Q3, Boosted By Sports TV, Political News

• by Wayne Friedman , 8 hours ago

Cord-cutting in the U.S. slowed down in the third quarter for traditional and virtual pay TV providers to a 4.6% decline, totaling 89.6 million U.S. subscribers. But this may be only temporary -- steeper declines could resume in future periods. 

This was a slight improvement from a decline of 5.2% in the second quarter and a 5.1% drop in the first quarter of this year, says MoffettNathanson Research. The last two quarters of 2019 saw 2.9% and 3.7% declines.

Pay TV subscribers for the most part remained with their cable, satellite, telco, or virtual pay services due to the return of major live TV sports programming -- Major League Baseball, the NBA, and the NHL -- in July through September, delayed by COVID-19 pandemic issues.

In addition, consumers also watched live TV news in big numbers, with heightened interest in cable and broadcast TV political and election coverage.

The only growth came from virtual pay TV subscribers -- up 21% in the period to a total of 11.5 million subscribers. Cable TV subscribers were down 4.1% to 47.5 million; while satellite subscribers were 14% lower to 22.6 million and telco subscribers were down 7.3% to 7.9 million.

Over the last ten years, pay TV penetration of homes has fallen to 61% of U.S households in 2020 -- down from 88% in 2010 due to cord-cutting.

Craig Moffett, senior media analyst of MoffettNathanson Research, writes: “What is left is stickier, skewing to sports fans with few credible alternatives. SVOD [subscription video on demand platforms] and AVOD [advertising video on demand] don’t help sports and news fans.”
He adds that rural households have fewer alternatives.

One silver lining is that the pay TV business could bottom out at around 80 million subscribers.

Moffett says: “We might be getting closer to a “floor” of hardcore sports and news junkies. Whether that core ends up being served by traditional or virtual MVPDs remains to be seen.”

He says: “It’s not unreasonable to think that the glide path to get there could be shallower than the peak rates of decline we’ve seen over the past year.”