With the two largest U.S. cable companies — Comcast and Charter Communications — expected to release third-quarter results later this week, investors are bracing for a big slowdown in broadband subscriber growth. But at least one analyst believes the decline won’t be quite as jarring as some may expect.

In an Oct. 20 report, Evercore ISI media analyst Vijay Jayant wrote that while Q3 broadband subscriber increases will be lower than they have been in the past few quarters, it won’t be that dramatic of a decline.

This comes just as cable operators are preparing to release their Q3 results. Comcast is expected first out of the gate, with its Q3 earnings report due on Oct. 28, followed by Charter (Oct. 29), Altice USA (Nov. 4) and Cable One (Nov. 4). 

Also Read: How Slow Will The Broadband Slowdown Be? 

“Broadband growth may be slowing, but we don’t think it’s dropping off a cliff,” Jayant wrote, adding that cable stock prices have dropped considerably since Comcast said it was seeing high-speed internet subscriber additions off a little bit in August. “We don’t believe that these comments indicate that the broadband market is experiencing a dramatic shift, however, and expect continued healthy subscriber growth, with nearly 900,000 subscriber net adds in 3Q, of which we expect cable to capture [about] 75%.”

While Comcast’s admission that broadband growth was slowing did send the sector down a bit, cable stocks fell hard after Altice USA CEO Dexter Goei told the Goldman Sachs Communacopia conference his company would lose between 15,000 and 20,000 broadband customers in Q3. In the past month (Sept. 22 to Oct. 22), cable distribution stocks are down about 6%, with Altice USA falling the hardest (down 26.2%), followed by Cable One (down 6.7%), Comcast (down 2.8%) and Charter (down 2.7%).

Also Read: Analyst Says Telcos Better Positioned to Chip Away at Cable’s Broadband Lead

Jayant’s optimism is fueled by the relative scarcity of strong new broadband competition — he estimated that only 35% of cable households have a fiber-to-the-home competitive option, and fixed wireless availability is still in the low single-digit percentages. In addition, recent pricing changes for cable wireless offerings (which can only be sold with a broadband connection) should help stabilize high-speed internet subscriber rolls.

Also Read: Broadband Slowdown Forces Analyst to Go Negative on Cable Sector  

On the cable side, Jayant was encouraged by low non-pay and move churn. The analyst wrote that government programs like the Emergency Broadband Benefit Program (EBBP) and child tax credit payouts may have helped keep non-pay churn in check, while move churn, despite the red-hot housing market, may be lower due to renters who have opted to stay put. Jayant noted that as much as 60% of annual move churn is due to renters. 

As a result, Jayant estimates that Comcast will add about 280,000 residential broadband customers in the third quarter, less than half the 617,000 customers it added in the same period last year during the height of the pandemic. He predicted Charter would add about 325,000 broadband customers (compared to 494,000 additions in Q3 2020) and Altice USA would lose 20,000 customers (versus adding 28,000 in Q3 2020). Cable One, which added 28,000 broadband customers in Q3 2020, will see that slow to 15,000 additions in Q3 2021, according to Jayant.

Slow Start to Q3

Overall, the Evercore analyst expects cable broadband growth to slow by about 42% in Q3 2021 to 665,000 additions from 1.36 million in Q3 2020. Those numbers should pick up in the fourth quarter — Jayant estimated that cable would add 710,000 broadband customers in Q4 2021, compared to 859,000 additions in Q4 2020. For the full year, cable broadband customer additions will be down about 33% to 3.1 million from 4.6 million in 2020. 

Video subscriber erosion will continue, according to Jayant, who expects pay TV to lose about 1.7 million customers in Q3 2021, up by 300,000 sequentially. For the full year, Jayant estimates cable operators will shed about 3.2 million video customers, up from a loss of 2.4 million in 2020. While virtual MVPDs will take up some of that slack — Jayant predicted they would add about 1.5 million video customers in 2021 — it won’t be enough to stop the bleeding. Jayant predicted that total pay TV subscriber losses, including cable, vMVPD, satellite and telco operators, will rise 1% to 4.72 million from 4.68 million in the prior year.

Roku reported a 50% year-over-year rise in third quarter revenue to $260.9 million, as it continues to experience huge advertising growth on its platform.

In fact, “platform revenue” as the streaming company calls it, increased by 79% to $179.3 million in Q3—notable, given that ad sales for Roku surpassed its hardware business only last year. “Player revenue”—the amount of money generated by selling Roku OTT boxes, dongles and smart speakers—increased by 11% to $81.6 million in the third quarter.

Roku, which has been the hottest—and at times, most volatile—stock in the streaming video world over the last 18 months, beats analysts’ forecast in terms of revenue, gross profit and adjusted EBITDA.

Related: Roku to Acquire OTT Ad Firm Dataxu for $150M

Active users for the platform increased by 1.7 million during Q3 to 32.3 million, while the number of hours streamed in the Roku ecosystem increased by 0.9 billion during the quarter to 10.3 billion.

Average revenue per user was up 30% to $22.58, while gross profit increased by 50% to $118.5 million.

In their letter to shareholders today, Roku CEO Anthony Wood and CFO Steve Louden tied Roku’s expansion directly to the ongoing spike in cord-cutting.

“According to eMarketer, around 56 million households in total will have canceled cable or satellite TV subscriptions by 2023,” the letter said. “Approximately 1.7 million consumers cut the cord in Q3 alone. Our own research indicates that roughly 50% of U.S. cord cutters are Roku customers, and cord cutters who choose Roku products are highly satisfied with the decision and extremely unlikely to consider returning to a traditional pay TV subscription.”

Roku will conduct its quarterly earnings call Wednesday at 5 p.m. EST. 

Roku reported a 50% year-over-year rise in third quarter revenue to $260.9 million, as it continues to experience huge advertising growth on its platform.

In fact, “platform revenue” as the streaming company calls it, increased by 79% to $179.3 million in Q3—notable, given that ad sales for Roku surpassed its hardware business only last year. “Player revenue”—the amount of money generated by selling Roku OTT boxes, dongles and smart speakers—increased by 11% to $81.6 million in the third quarter.

Roku, which has been the hottest—and at times, most volatile—stock in the streaming video world over the last 18 months, beats analysts’ forecast in terms of revenue, gross profit and adjusted EBITDA.

Related: Roku to Acquire OTT Ad Firm Dataxu for $150M

Active users for the platform increased by 1.7 million during Q3 to 32.3 million, while the number of hours streamed in the Roku ecosystem increased by 0.9 billion during the quarter to 10.3 billion.

Average revenue per user was up 30% to $22.58, while gross profit increased by 50% to $118.5 million.

In their letter to shareholders today, Roku CEO Anthony Wood and CFO Steve Louden tied Roku’s expansion directly to the ongoing spike in cord-cutting.

“According to eMarketer, around 56 million households in total will have canceled cable or satellite TV subscriptions by 2023,” the letter said. “Approximately 1.7 million consumers cut the cord in Q3 alone. Our own research indicates that roughly 50% of U.S. cord cutters are Roku customers, and cord cutters who choose Roku products are highly satisfied with the decision and extremely unlikely to consider returning to a traditional pay TV subscription.”

Roku will conduct its quarterly earnings call Wednesday at 5 p.m. EST. 

Comcast continued to cut its basic-video customer losses, reporting a loss of 48,000 subscribers in the third quarter, nearly half the 81,000 it lost in the prior year and its best Q3 in nine years, while posting even stronger growth in high-speed data customer additions.

Comcast added 320,000 high-speed data customers in Q3, its best results in six years, the company said. The customer improvements led to strong financial growth in the period for its cable operations – revenue was up 6.3% to $11.7 billion and operating cash flow rose 6.4% to $4.7 billion.

UPDATES: Analyst Tom Eagan, of Telsey Advisory Group, called the results very solid and largely in-line with his expectations, with NBCUniversal performance going beyond Telsey forecasts. And Craig Moffett, principal and senior analyst at MoffettNathanson, said Comcast's two consecutive quarters of solid video subscriber numbers might prompt a re-examination of the premise that video cord cutting is a problem for the cable industry. Moffett said broadband has helped cable gain back share from satellite and telco-TV rivals, but he said investments in improved user interface and VOD libraries also are "emerging as genuine sources of competitive advantage." 

At NBCUniversal, revenue increased 20.8% to $7.2 billion and operating cash flow rose 17% to $1.7 billion on strong results from its movie studios and theme parks. At its cable networks, revenue increased 7% to $2.4 billion, driven by an 8.6% increase in distribution revenue and a 2.0% increase in advertising revenue, partially reflecting the introduction of NASCAR on our sports network, NBCSN, as well as a 17.6% increase in content licensing and other revenue. Operating cash flow decreased 3.9% to $835 million compared to $868 million in the third quarter of 2014, reflecting higher revenue, more than offset by increased sports programming costs, driven by the impact of NASCAR.

“I’m pleased to report that our businesses generated outstanding revenue and operating cash flow growth for the third quarter of 2015,” Comcast chairman and CEO Brian Roberts said in a statement. “At Cable Communications, overall customer relationships increased 156,000, a 90% improvement compared to last year, video subscriber results were the best for a third quarter in 9 years, high-speed Internet subscriber results were the best for a third quarter in 6 years, and churn across all product categories continues to improve. NBCUniversal also delivered terrific results, including another record-breaking box office quarter driven by Minions and Jurassic World, the highest summer attendance ever at our theme parks, and maintaining the #1 broadcast network ranking for the fifth summer in a row. These outstanding results from our unique portfolio of complementary businesses underscore our confidence that we are well positioned to compete, continue our strong performance and drive shareholder value.”   

Comcast reported strong earnings Thursday, turning in its best third-quarter subscriber numbers in seven years.

Here are the company's highlights. More to come after today's earnings call.

Consolidated revenue Increased 4%, while operating cash flow and operating income Increased 7% and 9.7%, respectively.

 *   Free cash flow increased 26.7% to $2.5 billion;

 *   Earnings per share increased 52.3% to $0.99;

*     Excluding income tax adjustments and transaction-related costs, earnings per share increased 12.3% to $0.73; and

 *   Quarterly dividends and quarterly share repurchases Increased 31.6% to $1.3 billion.

Cable Communications Q3 2014 Highlights:

 *   Cable Communications revenue Increased 5.2% and operating cash flow advanced 5.1%;

 *   Cable Communications customer relationships Increased by 82,000 to 26.9 million;

 *   Video customer net losses declined to 81,000, marking the best third-quarter result in seven years;

 *   High-speed Internet customers increased by 315,000 as revenue grew 9.6%; and

 *   Business services revenue Increased 21%, achieving a $4 billion annualized run-rate

NBCUniversal Q3 2014 Highlights:

 *   NBCUniversal revenue Increased 1.2% and operating cash flow increased 13.3%;

*    Operating cash flow margins expanded to 23.9% from 21.4% in the prior-year period; and

 *   Broadcast revenue Increased 7.7% and operating cash flow grew over $100 million.

TNT rode its original series to the top of the third-quarter primetime ratings charts, the second straight quarterly win for the drama network.

TNT, whose second-quarter win broke USA Network’s record of 31 straight winning quarters dating back to the mid-2000s, made it two in a row by averaging 2.2 million viewers (down 3% from Q3 2013) during the period of June 30 to Sept. 28, according to Nielsen ratings figures. TNT was paced by strong performances from established original series Major Crimes and Rizzoli & Isles, as well as new series The Last Ship.

USA finished second, averaging 2.1 million viewers, which was off 23% from the same period last year. Helped by strong performances from WWE Monday Night Raw and Suits, USA took the top spot among entertainment networks in key demos, including adults 18-49, adults 25-54 and adults 18-34, according to Nielsen.

Disney Channel finished third among all basic-cable networks, averaging 1.9 million viewers, down 24% from last year, followed by ESPN (down 8%) and Fox News Channel (up 11%), which tied with 1.8 million viewers each, according to Nielsen.

History fell 16% from Q3 2013 in finishing fifth, with 1.7 million viewers, while TBS (1.6 million viewers, down 12%), HGTV (1.4 million, up 8%), FX (1.3 million, down 2%), Discovery Channel (1.3 million, down 1%) and A&E Network (1.2 million, down 32%) rounded out the top 10.

On a 24-hour basis, Disney Channel and Nickelodeon finished in a virtual tie, both averaging 1.4 million viewers and both falling off 20% from the same period last year. Adult Swim (1.1 million viewers, down 9%) finished third, while USA lost 11% of its audience, Cartoon Network broken even and Fox News was up 2% as the three networks tied with 1.0 million viewers.

On the cable news front, Fox News continued its dominance of the category, averaging 1.8 million viewers to top all comers. CNN barely nipped MSNBC for second-place honors, with CNN posting a 3% increase to 562,000 viewers and MSNBC dropping 4% to 561,000 watchers, according to Nielsen. HLN finished fourth with 357,000 viewers, which was down 3% from last year.

ESPN’s Monday Night Football games and its July 1 FIFA World Cup telecast represented the top five most-watched shows during the quarter, with a Sept. 9 episode of FX’s drama series Sons of Anarchy, MTV’s Aug. 24 Video Music Awards telecast and three summer episodes of TNT’s Rizzoli & Isles making up the top 10 shows for the quarter, according to Nielsen.