articles Ratings /ratings/en/research/articles/230515-cord-cutting-worsens-raising-questions-about-future-of-u-s-pay-tv-ecosystem-12732145 content esgSubNav
In This List

Cord-Cutting Worsens, Raising Questions About Future Of U.S. Pay-TV Ecosystem


AI In Real Estate: What To Watch As Adoption Accelerates


China EV Startups Struggling To Stay Afloat


U.S. Leveraged Finance Q1 2024 Update: For Most 'B-' Rated Issuers, Solid Businesses Have Shaky Finances


Credit FAQ: U.S. Digital Publishers Have Cause For Concern Over Google's AI Overviews

Cord-Cutting Worsens, Raising Questions About Future Of U.S. Pay-TV Ecosystem

The two largest cable companies, Comcast Corp. and Charter Communications Inc., recently reported aggregate residential video subscriber losses of 9.1% for the first quarter of 2023, significantly higher than 1Q22's 6.0% pace and well ahead of S&P Global Ratings' forecast. With this report we are updating our U.S. pay-TV video subscriber forecast, which we base on a roll-up of our individual company forecasts, and commenting on how it could affect our ratings on companies within the U.S. pay-TV ecosystem.

Legacy Pay-TV Video Cord-Cutting To Worsen Before It Gets Better

We expect the rate of overall pay-TV subscriber losses in 2023 will modestly increase from 2022's 7.0% decline (we had previously expected 2022's decline to be 6.0%). We forecast overall cord cutting, which includes both the losses at the legacy providers and the modest growth at the virtual operators, to be 7.1% in 2023. 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.

Total 2023 cord cutting will be impacted by macroeconomic headwinds.   We expect the U.S. economy to fall into a mild, shallow recession during the mid-part of the year, which could increase pressure on consumer spending. This pressure is exacerbated as both the pay-TV operators and direct-to-consumer (DTC) streaming video on demand (SVOD) operators have aggressively raised prices in the last year. We believe the combination of an economic slowdown and higher prices will result in both weaker SVOD subscriber growth and increased pay-TV subscriber churn.

We expect these subscriber losses to continue into 2024, leading to total pay-TV subscriber losses increasing to 8.3%. This will be driven by 13.2% losses for legacy pay-TV operators, somewhat countered by 4.5 % growth in virtual pay-TV subscribers. Our view on the decline of the pay-TV bundle incorporates two key assumptions:

1. Virtual pay-TV growth has slowed quickly as the price difference to legacy pay-TV narrows.   We don't believe virtual pay-TV services are a long-term solution for the decline of the pay-TV ecosystem. While there was much fanfare when these low-priced, slimmed-down alternatives launched, these services have grown in both bulk and price and now more closely resemble a traditional full-size pay-TV bundle. The rapid price escalation has quickly reduced their competitive advantage. These services are likely to be less financially stable than legacy pay-TV services. With no contract and no equipment fees, these virtual services have much greater monthly churn, and thus their revenue streams are more volatile versus those from traditional cable TV subscribers. We assume virtual pay-TV subscriber growth slows to 4.5% in 2024.

2. There is a base of pay-TV subscribers at which declines could moderate.  We still believe a base of pay-TV subscribers (primarily sports enthusiasts and families with a broader variety of viewing preferences) could moderate the pace of pay-TV sub losses. However, we are not sure at what level this begins to happen. We have moved this inflection point in our longer-term industry forecast to beyond 2025 (previously it was 2025). Before that point is reached, we forecast not only will the pace of subscriber declines increase for the next few years, but also pay-TV operators will fully pass along programming cost increases to the consumer, resulting in steep video price hikes. Thus, pay-TV revenues should decline at a more modest pace than subscriber declines. We forecast legacy pay-TV revenues will decline 5.0% in 2023 and 5.9% in 2024.

Why could we be wrong in assuming declines moderate longer term

Sports programming is becoming more widely available on streaming platforms, eroding one of the few competitive advantages of the pay-TV bundle.   We view sports as the glue holding the pay-TV bundle together, because key sports content remains exclusive to TV and is overwhelmingly watched live. While still the most attractive content on TV, the draw of sports on TV is somewhat weakening as key sports programming, in particular the National Football League (NFL), is increasingly available online. Notably, both CBS and NBC simulcast their NFL broadcasts on their streaming services, Amazon Prime now broadcasts Thursday Night Football games, and the NFL Sunday Ticket is now available on a streaming platform, YouTube TV. Other major sports leagues followed this lead--in particular Major League Baseball has carved out niche packages that offer games exclusively on streaming (for example, Apple TV+'s Friday night lineup and Peacock's Sunday morning lineup). Longer term, the availability of key sports programming on either streaming exclusively or on both linear TV and streaming platforms could accelerate the decline of the linear TV bundle as consumers now have options. This availability of sports on streaming will continue to appeal to casual sports fans, leaving the hardcore sports fans to remain loyal to the bigger pay-TV packages.

Table 1

Pay-TV Subscribers Forecast By Distribution Platform
Percent annual change
Large Cable Midsize Cable Small Cable Total Cable Satellite Telco Total Legacy Virtual Overall Pay-TV
2020a (3.8) (9.0) (10.1) (4.8) (14.0) (14.5) (8.7) 24.7 (4.7)
2021a (5.9) (9.3) (12.7) (6.7) (11.7) (13.2) (8.8) 19.9 (4.3)
2022a (8.2) (11.6) (13.6) (8.9) (15.3) (12.9) (11.1) 9.6 (7.0)
2023f (9.2) (12.9) (12.8) (9.8) (18.1) (13.8) (12.4) 10.4 (7.1)
2024e (10.5) (11.5) (11.3) (10.7) (18.5) (15.0) (13.2) 4.5 (8.3)
Large cable includes Comcast and Charter. Midsize cable includes operators with more than 1 million video subscribers but not including Comcast Corp. and Charter Communications Inc.. Small cable includes operators with less than 1 million video subscribers and includes overbuilders. Satellite includes DirecTV and Dish. Telco includes Cincinnati Bell, Verizon and AT&T (U-verse). Virtual includes SlingTV, philo, Sony Playstation, YouTube TV, fuboTV, AT&T TV (and its incarnations), and Hulu Live. a--Actual. f--Forecast. e--Estimate. Sources: Company reports, S&P Global Ratings estimates.

We expect the rate of pay-TV subscriber losses for the cable sector to increase to 9.8% this year versus 8.9% last year.   The increase comes from both larger cable operators--a 100 basis point (bp) increase to 9.2% from 8.2% in 2022--and midsize cable companies (12.9% versus 11.6% in 2022). This pace should continue, or even worsen, because the sector is indifferent as to whether unprofitable customers get video service from cable companies or a third-party service. For example, in its most recent earnings call, Altice USA's CEO commented that the company may consider outsourcing its video service.

To garner maximum market share, cable companies had historically subsidized consumers' bills by absorbing a portion of the programming cost increases imposed by media companies. Small and midsize cable companies first shifted away from this practice to focus on profitability instead of unit growth and began to fully pass these higher rates directly to consumers. Comcast followed suit in 2021, and its net pay-TV subscriber losses have nearly quadrupled in just two years. Charter bucked the industry trend for years by using "skinny bundle" options, keeping losses the lowest in the industry. However, we expect Charter's pay-TV losses to increase to levels more in line with the rest of the industry by 2024, as minimum carriage requirements of certain channels reduces flexibility to create customizable bundles..


Overall, we expect satellite pay-TV subscribers to decline at a mid- to high-double-digit percentage. We believe satellite TV will continue to lose market share in markets where it competes with a cable company that can offer a bundled discount with high-speed internet, which has been a trend for years. Therefore, the addressable market for satellite is increasingly skewed toward rural markets where cable operators do not operate and therefore lack reliable broadband data services and are limited to only pay-TV for video service. Over the next five years, this will likely change. The cable and telecom companies, in search for growth, are expanding their broadband footprint into both unserved and underserved markets. In addition, the U.S. government has allocated $42 billion as part of the Broadband Equity, Access, and Deployment (BEAD) program to increase in-home broadband availability in rural markets, making streaming options available to those underserved consumers. We believe cord-cutting could accelerate as consumers in these areas subscribe to streaming services, although this will take several years. We also anticipate 2023 will bring elevated churn for DirecTV as it loses subscribers that had signed up for its NFL Sunday Ticket service, which is now with YouTube TV.


We believe telecom companies, outside of those that offer fiber-to-the-home (FTTH) services, will be generally content to let video customers churn over the next few years. Somewhat countering this, several telco companies have successfully offered cloud-based TV services. As a result, we expect video subscriber losses will increase to 13.8% this year and remain elevated until non-FTTH video subscribers completely depart.

Chart 1


The Impact On The Television Sector Is Broadly Negative But Company-Specific

We view the rate of cord-cutting as a credit negative for the entire TV media sector given that media companies have come to depend on oversized earnings from this sector. Still, the degree varies by subsector, with operating metrics deteriorating quicker for some. TV broadcast networks and local TV stations are core elements of any bundle--and they have over-the-air optionality. On the other side of the spectrum, regional sports networks, which depend on broad distribution to overcome steep sports rights fees, and children's and premium cable networks, which both face cannibalization from streaming services, are most vulnerable to cord-cutting. The ultimate impact to individual companies' operating and credit metrics depends on the entity. This assessment isn't uniform because most large media companies have diverse business operations, and their streaming DTC services benefit from the decline in legacy television. We have previously discussed this in greater detail in "U.S. Linear TV's Decline Won't Affect Media Companies Equally," published Oct. 12, 2021.

How This Updated Forecast Affects Credit Ratings On Pay-TV Operators

Cable companies

We don't expect any rating actions resulting directly from our updated cord-cutting forecast because cable companies are generating minimal earnings and cash flow from their video service. Despite no broadband subscriber growth, broadband service provides a powerful pricing counterbalance. By charging a premium for stand-alone broadband and then inducing a portion of cord-cutters to buy faster broadband tiers, cable operators can minimize the impact on earnings and cash flow. Second, video makes up a shrinking percentage of total operating income even for larger operators. For smaller and many midsize operators, video is at best roughly cash flow break-even.

DBS satellite operators

On ratings on both Dish and DirecTV, at the very low end of the ratings scale, already reflect these concerns. Both companies also face weak prospects as the pay-TV bundle unravels and the addressable market shrinks. The increasing disparity between their operating strategies is material to our view: Dish has a modestly better position than DirecTV's because of Dish's lower price, which makes its service less vulnerable to cord-cutting; greater dependence on rural customers, which have lower churn rates because of fewer video service options; and a more established streaming platform. However, the rating on Dish hinges largely on the risk of cash upstreaming to the parent to fund wireless ambitions.

Wireline telecom operators

The legacy wireline telecom operators' (telcos') interest in offering their own pay-TV services has waned the past few years because of the high programming costs and lack of scale, which have resulted in very low product margins. We don't expect this indifference to change even as telcos increase FTTH infrastructure deployments. Given their smaller scale, which will exclude telcos from getting the volume discounts enjoyed by Comcast and Charter, video will continue to be a high-cost, low-margin business. We expect telcos' pay-TV subscribers who get their service via older network infrastructures will continue to decline faster than the overall pay-TV industry while those overwhelmingly on FTTH infrastructure will likely decline at the industry pace. Still, our credit ratings on wireline telcos are largely unaffected by this trend because pay-TV is only a small percentage of their revenues and cash flows.

Related Research

This report does not constitute a rating action.

Primary Credit Analyst:Naveen Sarma, New York + 1 (212) 438 7833;
Secondary Contacts:Allyn Arden, CFA, New York + 1 (212) 438 7832;
Chris Mooney, CFA, New York + 1 (212) 438 4240;
William Savage, New York + 1 (212) 438 0259;
Rose Oberman, CFA, New York + 1 (212) 438 0354;
Jawad Hussain, Chicago + 1 (312) 233 7045;

No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.

Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.

To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.

S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.

S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, (free of charge), and (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at


Create a free account to unlock the article.

Gain access to exclusive research, events and more.

Already have an account?    Sign in