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Title: Pay-TV Companies Are in Crisis Mode
Source:
Bloomberg
URL Source: https://www.bloomberg.com/news/arti ... n-painful-time-for-at-t-viacom
Published: Oct 13, 2017
Author: Scott Moritz and Gerry Smith
Post Date: 2017-10-13 00:56:13 by Tooconservative
Keywords: None
Views: 1213
Comments: 7
AT&T, whose ownership of the DirecTV satellite service makes it the biggest U.S. pay-television provider, said late Wednesday it will report a third-quarter loss of 390,000 satellite and cable customers, echoing a similar warning weeks earlier from Comcast Corp. The same night, Viacom cautioned that its distribution deal with Charter Communications Inc., the second-biggest cable U.S. company, may lead to a blackout, potentially testing whether millions of viewers are willing to go without MTV and Nickelodeon. Shares of both companies retreated Thursday, contributing to a broader selloff in the sector. The S&P 500 Media Index, which includes Comcast and ESPN owner Walt Disney Co., slid 2.3 percent to the lowest level since December. After decades of steadily increasing bills and ever-bigger packages of channels, the pay-TV ecosystem is in full-blown crisis mode. AT&T, Dish Network Inc. and others are offering cheaper, online-only versions of cable to lure customers back, but that means having to accept thinner profit margins. “Those salad days of fat bundles, automatic carriage renewals and customary affiliate steps ups are long gone,” Citigroup Inc. analyst Jason Bazinet wrote in a note this week. “Today, every media and cable firm is jockeying for self-preservation. And we suspect the next chapter in this new era means Charter will drop -- or significantly curtail -- distribution of Viacom’s content.” Barring a major fourth-quarter comeback, 2017 is on course to be the worst year for conventional pay-TV subscriber losses in history, surpassing last year’s 1.7 million, according to Bloomberg Intelligence. That figure doesn’t include online services like DirecTV Now. Even including those digital plans, the five biggest TV providers are projected to have lost 469,000 customers in the third quarter. AT&T sank 6.1 percent, the biggest one-day loss since November 2008. Dish, which also provides satellite service, declined 5.1 percent. Viacom dropped 2.5 percent while AMC Networks Inc. fell 6.8 percent after Guggenheim Securities LLC downgraded the two stocks to neutral from buy. Dallas-based AT&T is pushing headlong into TV programming by acquiring HBO and CNN owner Time Warner Inc. in an $85.4 billion deal. Chief Executive Officer Randall Stephenson has argued that the acquisition will let AT&T create compelling video packages for mobile subscribers and provide valuable targeting information for advertisers. But with video subscriptions falling, Stephenson is also under pressure to prove he can keep people paying for TV in the first place. “It is becoming increasingly clear that the wheels are falling off of satellite TV,” said Craig Moffett, an analyst at MoffettNathanson LLC, in a research note. Poster Comment: Who is benefiting? "Netflix, presumably one of the beneficiaries of cord-cutting because former cable and satellite TV customers instead flock to its service, saw its shares rise less than 1 percent to $195.86, giving it a market cap of $84.6 billion, more than the combined value of Viacom, CBS and 21st Century Fox." 
Investors in traditional TV providers are reeling as companies from AT&T Inc. to Viacom Inc. fail to stop the desertion of customers lured away by cheaper entertainment options such as Netflix and Snapchat.
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Bloomberg: Comcast Pressures Local Cable Firms to Curb Low-Cost TV Packages Comcast has tried to limit the availability of sports-free offerings in contract talks with pay-TV operators, according to the American Cable Association, whose members have about 7 million subscribers. In addition to being the largest U.S. cable provider, Comcast owns regional sports channels in markets such as Boston, Chicago and Philadelphia. The claim shows programmers are fighting back as more consumers seek TV options that don’t include sports. Cable operators are trying to stem subscriber losses by offering a “basic” service with just a few channels and internet access for fans of Netflix or Amazon. Philadelphia-based Comcast, for instance, recently started selling Instant TV, a streaming service with mostly broadcast channels but not ESPN, for $18 a month. In contract talks, Comcast has told small cable operators that if more than 15 percent of their subscribers get basic TV and internet service, they must include the regional sports networks in that bundle, according to a person familiar with the matter who asked not to be identified because the discussions are private. That drives up the cost of the basic service and forces cable operators to suppress demand by raising prices, according to the cable group. The organization spelled out its concerns with Comcast in a letter Tuesday to the U.S. Federal Communications Commission. The agency regulates the industry and issues an annual report to Congress about competition among pay-TV operators. Officials with Comcast, which also owns NBC and cable channels including USA Network and Bravo, didn’t respond to a request for comment. . . .
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Top • Page Up • Full Thread • Page Down • Bottom/Latest Comcast Corp. is trying to restrict cable operators’ sales of low-cost TV service to ensure its regional sports networks don’t lose too many subscribers, according to a trade group of about 750 smaller companies that have taken their complaint to regulators.
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