Cord-Cutting Continues to Erode Pay-TV

The relentless wave of cord-cutting is still hammering pay-TV subscriber numbers, yet traditional operators are beginning to show faint signs of stabilizing the losses, according to MoffettNathanson’s latest “Cord-Cutting Monitor” report, released las week.

Craig Moffett, the firm’s analyst, noted that a nearly 12% annual subscriber drop is far from encouraging. However, he highlighted a glimmer of hope: “For the first time since the decline began in the early 2010s, we’ve seen three consecutive quarters of improvement in the rate of decline for traditional pay-TV.” Moffett speculated that the industry might be approaching a “long-imagined bottom,” where only die-hard sports and news viewers remain.

Despite this potential stabilization, the numbers paint a grim picture. Penetration of linear video from traditional and virtual multichannel video programming distributors (MVPDs), covering both residential and commercial sectors, has dipped below 50% of occupied households, hitting 49.4%—a level unseen since 1987. Traditional pay-TV providers (cable, satellite, and telecom) now serve just 34.4% of households.

This ongoing decline has pushed major players like NBCUniversal and Warner Bros. Discovery to announce plans to spin off their cable network units, with more likely to follow. While the pay-TV sector still generates significant profits and cash flow, it’s a far cry from the booming 1990s and 2000s.

Meanwhile, Charter Communications, Spectrum’s parent, is taking a different tack by bundling streaming services into its pay-TV and broadband packages at no extra cost, offering roughly $80 in value to subscribers. This added-value strategy contrasts sharply with YouTube TV’s price-driven approach.

Moffett also noted the lukewarm response to ESPN’s plan to launch a streaming service featuring its full suite of linear networks plus digital extras. Once a dreaded “nightmare scenario” for the pay-TV industry, Disney’s May 13 announcement barely registered. “The news was met with raised eyebrows, perhaps, but not abject fear,” Moffett wrote. With affordable sports-focused video packages already available and ESPN representing only part of the sports landscape, Moffett projects the service will attract just 3 million subscribers by 2030. Disney and ESPN executives have refrained from sharing their own forecasts.

Disney CEO Bob Iger, speaking on CNBC Tuesday, expressed optimism about linear TV’s role alongside streaming. “The combination of both is actually a winning combination for us,” he said, likely drawing on data similar to Moffett’s findings.