Hurricanes Harvey and Irma could have a significant effect on the pay TV provider businesses. Homeowners might look to accelerate cord-cutting and sign on to more digitally delivered TV network “skinny” services.
Speaking at the Bank of America Merrill Lynch media conference yesterday, John Stankey, senior executive vice president of AT&T — who is designated to be CEO of its Time Warner unit, a $85.4 billion deal yet to be completed — warned customers that disasters could bring significant changes in TV service.
“You see customers who lose their homes make a decision to disconnect the service. Then they go through a cycle of finding someplace else to live,” he said. “There isn't always perfect timing. One day in and one day out.”
With regard to its satellite pay TV business DirecTV, Stankey added: “We have put a lot of infrastructure in the ground ... exposed to high winds and water and that typically means damage. We don't know what the impact of Irma is going to be at this point, what's going to happen. We do know that Harvey's damage is widespread.”
Earlier in the day, Matt Strauss, executive vice president of the Comcast’s Xfinity services, said the company could lose 100,000 to 150,000 subscribers, in part, due to the hurricanes.
Stankey said the best example might be Hurricane Katrina, which hit New Orleans in 2005. But the pay TV business was still growing back then.
Now, he says, the traditional pay TV business is heading south. DirecTV may be in a better position, given its efforts to sell different products, such as DirecTV Now, the live, linear TV package of TV networks delivered via the internet.
“Pay TV as we know it today is at its peak — and it's going to continue to decline. The question is: What is rate and pace? There's a lot of licensing that's coming up over the next 12 to 18 months that opens opportunities to maybe change that product a bit,” he adds.
Future changes may also impact TV network licensing agreements for traditional pay TV services, due to different consumer demands.
“The flexibility of delivering the content of the end user in a way that makes sense to [consumers] has been somewhat restricted,” he said. “People know what the solutions are. And I believe they know what needs to happen to make the product more viable.”
For example, Stankey believes more on-demand content is of higher value to consumers.