Traditional cable TV operators are seeing a slowdown of rising broadband subscribers and subsequent revenues -- which, for years, has helped companies combat losing video subscribers and video revenue.
Moody’s Investors Service says that in the third quarter of 2018, its Video Replacement Rate (VRR) -- the pace of change at which broadband subscribers replace declining pay-TV subscribers, slowed to 3.1 times from 4.3 times in fourth-quarter 2017 for the industry.
Cable operator-based companies’ overall revenue growth also slipped 4% in the third quarter of 2018 from 4.1% in the second quarter. Growing of cash flow -- earnings, before interest, taxes, depreciation, and amortization -- also declined to 4.9% from 5.5% over the same period.
The best performer is Charter Communications -- which is performing at a 5.3 VRR rate. Comcast follows at 4.6. Comcast and Charter represent 80% of all traditional cable TV subscribers. The worst performers are Cablevision Systems (Altice USA) and Cable One -- each at a 0.5 VRR rate.
Overall, in the third quarter of 2018, broadband subscribers for major cable operating companies grew about 4.8% versus the third quarter of 2017, while video subscribers declined 1.9%.
From 2015 through the first quarter of 2017, broadband subscribers rose anywhere from 6.2% on average, while video subscribers sank 1.3%
In somewhat good news, Moody’s says the rate of churn is relatively stable over the last three quarters for both broadband and video.
In the third quarter of 2017, broadband subs were up 5%, while cable was down 1.6%. In the fourth quarter of 2017, broadband gained 4.7%, while cable was down 1.7%.
In the first quarter of 2018, broadband was 4.4% higher, while cable was down 1.9%; while in the second quarter of 2018, broadband was 4.6% more and cable lost 2%.