Craig Moffett says bearish investors are concerned about broadband capex, but overlooking wireless.
A combination of continued quarterly subscriber erosion, the shift of their best programming to streaming platforms and declining affiliate-fee growth could help accelerate the demise of linear TV as we know it, according to a MoffettNathanson report.
The first quarter of 2022 was not — to say the least — rosy for the linear video industry. In fact, the industry collectively lost an estimated 2.1 million subscribers across cable, satellite, telco and almost all virtual MVPDs, according to a new report from MoffettNathanson. Total net losses for the linear video industry marked “the worst quarter since the COVID sports (and jobs) blackout in Q1 2020,” wrote analyst Craig Moffett, with the industry shrinking 5.1% year over year.
Wireless subscriber growth has been off the charts over the past year, with second quarter increases nearing records as mobile service providers like AT&T, Verizon and T-Mobile blanket the market with free offerings. But as subscriber numbers have surged, MoffettNathanson principal and senior analyst Craig Moffett wrote in a research report that those new customers are a volatile bunch, meaning the industry may soon have to decide whether to keep heavy promotions going just to maintain the status quo, or risk losing them by turning off the promotional spigot.
AT&T’s stock ended its steady march higher Tuesday, dropping nearly 3% after respected Wall Street analyst Craig Moffett downgraded the telecom and media giant’s shares and called its pay-TV unit a “cancer.”
The U.S. pay TV business lost more than 1.5 million subscribers in the second quarter, hitting a loss rate of 5.4%. Given the obvious fault lines, the trend isn’t surprising, or even interesting, said MoffettNathanson analyst Craig Moffett. Certainly, cord cutting isn’t going to go away, but the loss rate should decelerate in the third quarter, the analyst predicts.
Exclusives
Video customers are worth substantially less than their broadband counterparts as viewership and focus continues to shift away from providing pay TV service and more toward broadband connectivity, MoffettNathanson principal and senior analyst Craig Moffett said at the National Cable Television Cooperative Winter Education Conference in Atlanta Monday.
Punctuated by the loss of 281,000 customers in the second quarter, Dish Network’s steady stream of retrans battles and carriage wars has resulted in the loss of 7.5% of its subscriber base in just one year.
Craig Moffett, an analyst with MoffettNathanson said that optimism over broadcaster windfalls in next year’s spectrum auction could be very misplaced since it is premised on a belief that the wireless business is healthy enough to spend like it did in the AWS-3 auction. “The reality is the companies are not generating enough cash to be able to sustain the kinds of purchases that they made in the AWS-3 auction and to try to do it again,” said Moffett at the State of the Net Wireless Conference on Monday in Washington.
Nathanson: No Limit In Sight For Retrans $
MoffettNathanson analyst Michael Nathanson keeps an eye on the big multimedia companies including 21st Century Fox, CBS and Disney. In this exclusive Q&A he talks about the TV advertising shortfall, the critical role of the NFL in broadcasting, why he think retrans and reverse comp will keep growing and more.
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No one on the planet may know more about the pay TV business than Craig Moffett, who analyzed it consistently and cogently for about a decade at Bernstein Research up until the end of last year. He resurfaced last month at his own research firm, Moffett Research, and returned Monday to the subject he knows so well with a simple message that stood out from the rest of a 135-page coverage initiation document: “cord-cutting is real.”
