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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: 1215
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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#5. To: Tooconservative (#0)
My son is 18 and at the front end of generation Z I believe. Subjective observations. He and his friends don't watch TV cable or any of the pay or local channels much. He watches some of the news with me and likes Animal planet, a bit of Discovery and Travel from time to time. These young adults are picky on what movies they go see in the theaters and use Netflicks and other movie type Apps to select any programs they like to watch. Frankly they are more into interacting via Skype and other comms venues to play games and comment on what's going on in the world. Shockingly Gen Z is not the sniveling snowflakes of Millennial gen. They tend to think millenials as stupid and trend conservative in politics. Times may be changing or I have a good "kid" with good friends. :-)
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