Legacy Pay TV Providers Take Hit, OTT Rises

Traditional pay TV distributors witnessed some of the steepest declines in fourth-quarter 2016 -- but adding in new “virtual” pay TV providers trimmed those drops. For many, this means cord-cutting has arrived.

MoffettNathanson Research says there was a 1.7% decline in traditional cable, satellite, and telco TV distributors -- losing 319,000 to total 96.499 million U.S. subscribers.

But at the same time, virtual/digital pay TV providers Sling TV and DirecTV Now added 500,000 subscribers. Together those services total 1.411 million -- 1.184 million for Sling TV and 227,000 for DirecTV Now.

“With the results now in from all the largest operators, it is clear cord-cutting of legacy distribution services -- that is, without including OTT-delivered virtual MVPD bundles, like Sling TV and DirecTV now (and soon, YouTube TV) -- has at least meaningfully accelerated,” writes Craig Moffett, senior research analyst of MoffettNathanson.

The total for traditional and digital pay TV was 97.91 million in the fourth quarter of 2016 -- slightly down, 0.8%, from 98.76 million in the fourth quarter of 2015.



Cable operators had net loss of 1,000 subscribers in the fourth quarter, whlle satellite operators were down 10,000 and telco companies sank 308,000 -- largely due to AT&T continuing to shift consumers from its U-Verse service to DirecTV.

Total new additions in the fourth quarter -- traditional and digital -- were at 181,000.

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