Analyst Sees 2021 Cord-Cutting Worsening Despite 1Q Improvement

Cord cutting
(Image credit: Future)

Wells Fargo analyst Steven Cahall expects cord-cutting to get worse in 2021 despite modest improvements in the first quarter.

Cahall said he now expects pay TV  losses to be 6% in 2021, compared to a previous estimate of 5.6%. Cord-cutting was 5.1% in 2020 and 5% in the first quarter.

Also Read: Cord-Cutting Getting Worse in 2021-22: S&P Report

“The outlook for pay TV sub declines is as cloudy as ever. We think Q1 trends were modestly better than 4Q20 and 2020 primarily due to less bad satellite losses. Yet, the biggest linear MVPDs are flagging elevated churn while vMVPD subs fell slightly sequentially,” he said in a report Wednesday.

Also Read: Satellite TV: Five Years, That’s All You’ve Got

Cahall noted that direct-to-consumer streaming service subscribers additions are running ahead of expectations and that the streamers will be adding more content in the second half of the year, possibly feeding that trend and spurring cord-cutting.

At the same time Charter and Comcast said on their earnings calls that they expect video sub losses to remain elevated, which would offset continued improvement by the satellite providers.

Cahall said higher cord cutting shouldn’t have a big impact on local broadcast companies, which are looking at better core advertising revenue, potential reverse comp relief from the networks and deregulation.

Fox and AMC Networks would be most at risk among the media stocks because of accelerated cord-cutting because they have fewer direct-to-consumer assets than their rivals, he said.

Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.