With most of the major distributors reporting, analyst Jeffrey Wlodarczak of Pivotal Research Group said his scorecard shows cable blowing away expectations for adding broadband subscribers at the same time pay-TV subs are declining.
Second-quarter U.S. net new broadband subs (including some private operators) rose 350% year over year to 1.1 million, Wlodarczak said in a research note Friday.
He said that total was “dramatically better” than Pivotal's forecast of 330,000 net additions, and the best performance in at least 15 years.
Cable accounted for 100% of the net adds, while telco subscribers were down 200,000.
Pay TV, or video, subscribers were another story.
“The loss of sports and expansion of cheap (often commercial free) entertainment alternatives (such as Disney+) led to yet another ugly Pay-TV result,” Wlodarczak said.
He estimates that the pay-TV industry lost 2 million subscribers in the quarter, up about 10% from a year ago.
That was better than PIvotal’s forecast of a drop of 2.5 million subscribers.
“Our view is that consumers stuck at home were temporarily less likely to churn off Pay TV boosted by government stimulus payments,” he said.
Wlodarczak normally does not include virtual multichannel video distributors in his total but he estimates the vMVPDs lost 1.6 million subs in the quarter. He figures that vMVPDs now have about 10.3 million subscribers.
Pay TV occupied household penetration was 61.0% a 2.7% sequential incremental decline in the second quarter from first quarter.
Wlodarczak said he thinks cable’s data plants--and their ability to increase speeds economically--are undervalued as investors. Cable will take share from the telcos in both household and enterprise customers. “As for cable/broadcast/sports nets without a credible DTC strategy (such as ViacomCBS, AMC Networks, Sinclair Broadcast Group and MSG Networks) our view remains to short every material bounce against the horrible PayTV backdrop.”
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