Pay-TV Companies Are in Crisis Mode - ‘The wheels are falling off of satellite TV’
Pay-TV Companies Are in Crisis Mode
2017 on pace to have biggest pay-TV subscriber losses
ever
‘The wheels are falling off of satellite TV’: Moffett
By Scott Moritz and Gerry Smith October 12, 2017, 9:04 AM
PDT October 12, 2017, 2:38 PM PDT
Investors in traditional TV providers are reeling as
companies from AT&T Inc. to Viacom Inc. fail to stop the desertion of
customers lured away by cheaper entertainment options such as Netflix and
Snapchat.
AT&T, whose ownership of the DirecTV satellite
service makes it the biggest U.S. pay-television provider, said late Wednesday
it will report a third-quarter loss of 390,000 satellite and cable customers,
echoing a similar warning weeks earlier from Comcast Corp. The same night,
Viacom cautioned that its distribution deal with Charter Communications Inc.,
the second-biggest cable U.S. company, may lead to a blackout, potentially
testing whether millions of viewers are willing to go without MTV and Nickelodeon.
Shares of both companies retreated Thursday, contributing
to a broader selloff in the sector. The S&P 500 Media Index, which includes
Comcast and ESPN owner Walt Disney Co., slid 2.3 percent to the lowest level
since December.
After decades of steadily increasing bills and
ever-bigger packages of channels, the pay-TV ecosystem is in full-blown crisis
mode. AT&T, Dish Network Inc. and others are offering cheaper, online-only
versions of cable to lure customers back, but that means having to accept
thinner profit margins.
“Those salad days of fat bundles, automatic carriage
renewals and customary affiliate steps ups are long gone,” Citigroup Inc.
analyst Jason Bazinet wrote in a note this week. “Today, every media and cable
firm is jockeying for self-preservation. And we suspect the next chapter in
this new era means Charter will drop -- or significantly curtail --
distribution of Viacom’s content.”
Barring a major fourth-quarter comeback, 2017 is on
course to be the worst year for conventional pay-TV subscriber losses in
history, surpassing last year’s 1.7 million, according to Bloomberg
Intelligence. That figure doesn’t include online services like DirecTV Now.
Even including those digital plans, the five biggest TV providers are projected
to have lost 469,000 customers in the third quarter.
AT&T sank 6.1 percent, the biggest one-day loss since
November 2008. Dish, which also provides satellite service, declined 5.1
percent. Viacom dropped 2.5 percent while AMC Networks Inc. fell 6.8 percent
after Guggenheim Securities LLC downgraded the two stocks to neutral from buy.
Dallas-based AT&T is pushing headlong into TV
programming by acquiring HBO and CNN owner Time Warner Inc. in an $85.4 billion
deal. Chief Executive Officer Randall Stephenson has argued that the
acquisition will let AT&T create compelling video packages for mobile
subscribers and provide valuable targeting information for advertisers.
But with video subscriptions falling, Stephenson is also
under pressure to prove he can keep people paying for TV in the first place.
“It is becoming increasingly clear that the wheels are
falling off of satellite TV,” said Craig Moffett, an analyst at
MoffettNathanson LLC, in a research note.
Comments
Post a Comment