A slight improvement in cord-cutting trends and contractual rate increases from new carriage deals helped top U.S. cable programmers bounce back in the third quarter with total distribution revenues of $11.08 billion, up 3.7% year over year. Although cable network results improved compared to the prior quarter, the key theme of company earnings discussions across the TV industry remained sharply focused on the progress of streaming initiatives.
After eight consecutive quarters of year-over-year declines, universe estimates data provided by Nielsen for 119 basic cable networks remained relatively flat at the end of September as pay TV providers managed to scale back on declines while cable networks with smaller audience bases added subscribers. AT&T Inc. was one of the few publicly traded cable network groups that delivered a slight uptick in universe estimates at the end of the quarter.
On AT&T's earnings call held Oct. 22, CEO John Stankey discussed the probability of pay TV households plateauing at the 55 million-60 million range and reiterated his belief that a certain number of sports-consuming households are going to be stickier customers for the pay TV bundle. However, he also expects the bundle to become thinner as channels fall away over time. Meanwhile, Disney CEO Bob Chapek highlighted the company's virtual multichannel service Hulu with Live TV as a solution to attract customers that have chosen to walk away from receiving content from the traditional TV platform during The Walt Disney Co.'s earnings call Nov. 12.
Many of the cable network programmers attributed the improvement in subscriber trends to the surge in popularity of virtual multichannel services, which benefited from the return of live sports programming. Kagan estimates that the increase in virtual multichannel video programming distributor subscribers overcame the declines in traditional MVPD subscribers during the quarter.
A look at skinny bundle base packages shows that cable network owners that delivered higher third-quarter affiliate revenues like Disney, Fox Corp., ViacomCBS Inc. and Discovery Inc. were also among the top programmers that enjoyed wide carriage on virtual multichannel services.
Please click here for an Excel attachment detailing select network carriage on virtual multichannel base packages.
Cable programmers also touted average rate increases and additional distribution received from new carriage deals or recent renewals with traditional and virtual multichannel providers as positive developments that helped mitigate subscriber decreases during the quarter.
Regardless of cable network results, however, the earnings discussions across the industry still revolved heavily on the over-the-top side of the business.
Cable network Q3'20 distribution revenue recap