After reporting record declines in pay TV subscriptions in Q2, 2022, MoffettNathanson’s Cord-Cutting Monitor has released new data showing that cord-cutting hit new records in Q3 2022, when total pay TV distribution declined by 6.3%.
The drop in pay TV subs was slightly worse than the 6.2% slide seen in Q2 and the 5.2% decline seen a year ago in Q3 2022.
MoffettNathan's definition of pay TV includes both traditional cable and satellite operators as well as newer vMVPDs like Fubo TV and YouTube TV.
To put this in perspective, MoffettNathanson reported that the “Q3 loss of 655K subscribers is the largest third quarter loss ever; last year’s loss was…617K and the year before just 91K” in Q3 2020.
“The decline in Q3 leaves pay TV penetration of occupied households including vMVPDs at 61.0% of households, a level last seen in 1993, a year before the arrival of satellite TV in the U.S.,” the researchers explain.
While broadcasters may view this as a trend reaffirming the value of their over-the-air broadcasts, it also promises to create some serious financial problems for stations, which in recent years have relied heavily on retransmission consent payments from pay TV providers.
BIA has predicted that subscriber fees from retransmission consent agreements will increase from $14.55 billion in 2022 to $17.37 billion in 2030, growth that will be difficult to maintain if the pay TV ecosystem continues to collapse.
This also means that there are now about 34 million incremental homes that “exist entirely outside the cable network ecosystem,” and that the total number is 55 million, MoffettNathanson said.
The growth of homes outside the pay TV ecosystem could also create problems for local and national broadcast TV advertising, which is already under pressure from streaming, by reducing potential audiences for programming.
Historically, the rise of pay TV helped expand the reach of broadcast content, which in turn helped their advertising efforts in reaching larger audiences.
More recently declining pay TV subscriptions have been coupled with higher levels of homes using TV antennas. Nielsen reported in Q4 2021 that 18.6 million homes used antennas, or 15% of the population.
But those numbers are still much lower than the 55 million homes Moffett Nathanson said are now outside the pay TV ecosystem of both traditional pay TV cable operators and newer vMVPDs like Hulu Live or Sling TV.
