The fourth album by the British rock band Supertramp was titled "Crisis? What Crisis?" Well, that seems to illustrate the current state of pay TV in the United States. In the second quarter of 2024, service providers lost another 1.62 million subscribers, bringing the total to a record low of 68.76 million.
Meanwhile, the outlook for the pay-TV market worsened over the weekend as ABC, ESPN, and other Disney-owned channels went dark on DirecTV after both sides failed to reach a new carriage agreement. While the overall U.S. pay-TV industry, including virtual multichannel video programming distributors (vMVPDs), lost fewer customers in Q2 2024 than in the same quarter last year, it still shed 4 million subscribers in the first six months of the year, according to MoffettNathanson's Q2 "Cord-Cutting Monitor" report.
Second quarter results left pay-TV subscribers declining at a rate of 6.9%, slightly worse than the -6.8% in the year-ago quarter, the report found. When vMVPDs are removed from the picture, the rate of decline among "traditional" pay-TV providers (cable, satellite and telco) was -12.6%, worse than -11.3% a year earlier.
Those traditional pay-TV providers lost 1.67 million subs in Q2, slightly better than a loss of 1.72 million subs in the year-ago quarter. Among that group, US cable lost 1.03 million in the quarter, compared to -495,000 for satellite (DirecTV and EchoStar/Dish) and -144,000 for the telcos.vMVPDs (YouTube TV, Fubo, Sling TV, etc.) added 49,000 subs in Q2, improving on a year-ago loss of 6,000 subs, extending the category's total to 19 million. The vMVPD "conversion rate" (the rate at which traditional video sub losses are re-captured by vMVPDs) was just 29.2%. The full pay-TV industry Q2 ended with 68.76 million subscribers, down from 73.83 million a year earlier.
The pay-TV outlook got a bit gloomier over the weekend as Disney's stable of channels, including ESPN and ABC, went dark on DirecTV just days before the start of the NFL regular season. DirecTV, which was spun off from AT&T in 2021, includes the DirecTV satellite TV service, DirecTV Stream and U-verse (the managed IPTV service that formerly was with AT&T).
The impasse has apparent linkages to Venu Sports, the sports programming joint venture of Disney, Fox and Warner Bros. Discovery that was just slapped with a temporary injunction on antitrust concerns. The JV is still facing an antitrust lawsuit filed by Fubo, a sports-focused vMVPD.
DirecTV is also upset that some of Disney's best programming, such as "The Bear" and "Only Murders in the Building," are exclusive to Hulu, the Disney-owned streaming service, while the first run of the new "Shogun" series is on Hulu rather than pay-TV.
FInally, The Disney-DirecTV impasse surfaces about a year after Charter Communications and Disney struck a new carriage deal following a brief blackout. Charter's new deal with Disney gives the cable operator clearance to bundle in the ad-supported Disney+ service to most pay-TV subs and ESPN+ to customers on Charter's sports-focused package.
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