Rising prices for traditional TV bundles are increasingly driving customers away from traditional TV. AT&T said it lost 90,000 video subscribers in the U.S. in the third quarter, a steeper drop than the same period last year. Its newer, cheaper online cable-like service, DirecTV Now, added 300,000 subscribers in the quarter, indicating that AT&T lost about 390,000 satellite TV and cable customers in the quarter.
Comcast forecast in early September that third-quarter losses of 100,000 to 150,000 video customers was expected, representing Comcast’s largest quarterly loss since 2014. The five biggest TV providers are projected to have lost 469,000 customers in just the third quarter.
Signs are emerging that the pay-TV ecosystem is in full-blown crisis mode. AT&T has blamed tough competition from other traditional TV providers like Comcast and newer digital-video services like YouTube TV for the subscriber losses. The company is also blaming stricter credit standards for customers and the impact from hurricanes.
AT&T’s ownership of the DirecTV satellite service makes it the biggest U.S. pay-television provider. Charter Communications Inc., the second-biggest cable U.S. company, is currently fighting with Viacom over a distribution deal that could lead to a blackout of Viacom’s channels for millions of its customers.
With video subscriptions falling, AT&T Chief Executive Officer Randall Stephenson is under pressure to prove he can keep people paying for TV. More people are dropping their traditional TV subscriptions in favor of cheaper streaming services.
To compete, AT&T, Dish Network, and others are now offering cheaper, online-only versions of cable to lure customers back. AT&T is also planning to acquire HBO and CNN owner Time Warner Inc. in an $85.4 billion deal.
Experts are saying that 2017 is on pace to have biggest pay-TV subscriber losses ever. Last year saw 1.7 million conventional pay-TV subscriber losses across the board, excluding online services like DirecTV Now. According to research firm eMarketer, 16.7 million U.S. adults had already cut the cord by the end of last year and that by the end of this year it will be 22 million.
The increase of cord cutters is weighing on TV providers’ stocks. AT&T stock fell 6.1 percent after the announcement in the biggest one-day loss since November 2008. Shares of rival satellite TV provider Dish and cable companies Comcast and Charter also declined.
Shares of AMC Networks, Discovery Communications, Viacom, Sinclair Broadcast Group, Time Warner, and E.W. Scripps Co. fell about 4 percent on average. Only one of the large conglomerates, 21st Century Fox, recorded a gain, a paltry one-tenth of 1 percent.