Cord cutting is getting ‘freaking ugly,’ analyst says

AT&T, Charter and Comcast all reported second-quarter results last week and analyst firm MoffettNathanson said the early figures add up to a truly bad quarter for traditional video service cord cutting.

The three providers reported an aggregate of more than 1.2 million video subscriber losses, which lead MoffettNathanson to estimate the cord-cutting rate would reach 5.5% during the second quarter. That would be the worst it’s ever been, and the firm expects the trend will continue to accelerate during the second half of 2019. Although, when accounting for virtual MVPD subscriber growth, the rate slows to 2.7%.

“With Comcast’s, AT&T’s and Charter’s 2Q earnings in the books, the early read on traditional cord-cutting is freaking ugly,” wrote Michael Nathanson in a research note, adding that the news is bad for programmers as well. “The growth of cord-cutting and the continued decline in viewership are weighing on advertising as well, as we forecast flat growth for the quarter.”

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AT&T saw the worst of the video subscriber losses so far. The company dropped 946,000 video subscribers – 778,000 from its traditional distribution services, DirecTV and U-verse, and another 168,000 from its streaming TV service DirecTV Now. The total was much higher than the 80,000 net video additions reported one year. AT&T now has 21.58 million traditional video subscribers (down 8.7% year over year) and 1.34 DirecTV Now subscribers (down 25.9% year over year).

Comcast lost 224,000 video subscribers (209,000 residential and 15,000 business) during the quarter. The losses brought its video subscriber total down to 21.64 million, and officially dropped its amount of business services video customers to fewer than one million.

Charter lost 150,000 residential video subscribers, compared with a loss of 73,000 in the second quarter of 2018. But, the company added 9,000 small and medium business video subscribers, so net video subscriber losses for the quarter totaled 141,000. Charter ended the quarter with 15.8 million residential video subscribers.