• by Wayne Friedman , Staff Writer, November 8, 2019

What is the real “value” of live, linear TV networks platforms -- those modern cable, satellite and telco services? And how do consumers perceived them?

Many analysts are concerned about low-profit margins for services like Sling TV and AT&T TV Now (former DirecTV Now).

Take Dish Network’s recent earnings release, touting the big growth of Sling TV, its MVPD (virtual multichannel video programming service). Sling over-delivered on analysts' projections -- up 214,000 subscribers versus analysts consensus estimate of 29,000.

Though Pivotal Research Group projected even better results -- an improvement of 48,000 -- media analyst Jeff Wlodarczak wasn’t all that impressed. Overall, he says of Dish: “Most of the broad subscriber beat [Dish satellite services and Sling TV] was driven by relatively low-quality [emphasis added] SlingTV subscribers.”

Ah hah. We take that to mean lower revenue per subscriber from Sling versus its pricier Dish satellite business. That is why consumers bought into Sling TV, DirecTV Now and others in the first place. It costs way less than cable, satellite or telco services.

But for investors, all that means -- at the moment -- is low profit margins.

Perhaps the better news was that Dish satellite subscribers only dropped 66,000 versus 341,000 in the same period the year before. Still, Wlodarczak says: “Dish’s core business... is a declining annuity” --  albeit, declining perhaps at a slower rate now.

AT&T is apparently in worse shape, sinking a massive 1.1 million subscribers in the third quarter, in total, for both its traditional pay TV services: DirecTV (satellite) and U-Verse (telco). Not to be outdone, AT&T TV Now — the former DirecTV Now — lost a net 195,000 subscribers in the three months ending Sept. 30.

Perhaps all this needs to be looked at in conjunction with very low costs for individual streaming services. Apple TV+ and Disney+ are priced at $4.99 and $5.99, respectively.  That’s a near-free cost for many consumers. 

NBCUniversal’s Peacock might even go further -- offering the new premium video service, set to launch next year, free to consumers, as a fully ad-supported service.

No matter. Big-time losses will abound for all these media companies' streaming plans -- with analysts guessing billions will be spent before profitability takes hold.

The bottom line is we'll hear the word “premium” connected to Apple TV+, Disney+, Peacock and HBO Max. No marketing efforts will call these any of these a “value” streaming service -- something that means cheap or discounted to many.

Lessons learned: Perhaps Sling TV and AT&T TV Now need to add the word “premium” to their marketing messaging. Consumers will feel better about the purchase.