NEW YORK—S&P Global Ratings has updated its U.S. pay-TV video subscriber forecast in the wake of the two largest U.S. cable companies, Comcast Corp. and Charter Communications Inc., reporting aggregate residential video subscriber losses for the first quarter of 2023 that were significantly higher than 1Q 2022 and well ahead of S&P Global Ratings' forecast.
"We expect the rate of overall pay-TV subscriber losses in 2023 will modestly increase from 2022's 7.0% decline," said Naveen Sarma, an analyst with S&P Global Ratings. "Legacy pay-TV subscriber declines, which includes cable, telco and satellite, will likely reach 12.4%, somewhat tempered by 10.4% growth of virtual pay-TV video subscribers. Virtual subscriber growth will benefit significantly from the NFL Sunday Ticket broadcast contract moving from DirecTV to Alphabet’s YouTube TV service."
S&P Global Ratings views the rate of cord-cutting as a credit negative for the entire TV media sector, although the degree varies by subsector, with regional sports networks and children's and premium cable networks being most vulnerable to cord-cutting.
"The ultimate impact to individual companies' operating and credit metrics depends on the entity," said Sarma, "because most large media companies have diverse business operations, and their streaming services benefit from the decline in legacy television."
In Q1, 2023 Comcast said it lost 614,000 video subscribers during the quarter, an increase from the 444,000 it reported in Q4 2022.
Charter meanwhile reported losing 815,000 subs in the first quarter, a 5.2% decline.
Pay TV providers, including cable, satellite and vMVPD companies representing 92% of the market, lost nearly 5.9 million net video subscribers in 2022, compared to a pro forma loss of about 4.7 million in 2021 according to Leichtman Research Group
