The top 6 cable, satellite and telco pay-TV operators in Q4: Ranking Comcast, Charter and more

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While the majority of pay-TV operators posted subscriber gains in the fourth quarter, the metrics were largely propped up by the performance of virtual services.

Now that the fourth-quarter earnings season is in the rear view, it's time to assess the damage. FierceCable has assembled a complete look at the results, ranking the top cable, satellite and telco pay-TV operators and offering a look at their performance in a number of key metrics, including subscriber growth and average revenues per user (ARPU).

To see our full reporting on the fourth quarter, click here.

First, let's look at the top pay-TV operators, ranked by number of subscribers. This list, built from operator earnings reports, ranks the nation's leading publicly traded pay-TV companies based on their video subscriber performance in the fourth quarter. It provides their quarterly net video customer adds/losses and ARPU for pay-TV services.

How the top 6 U.S. public pay-TV operators performed in Q4 in video (ranking by subscribers):

                                    Platform                       Video subs (mil.)         Net adds         Q4  ARPU

1          AT&T               IPTV + Satellite           25.265                         173K               $128.06

2          Comcast          Cable                          22.508                         80K                 $83.63

3          Charter            Cable                          16.836                         -51K                $81.01

4          Dish Network  Satellite                       13.671                         28K                 $88.66*

5          Verizon            IPTV                            4.694                           21K                 n/a

6          Altice USA       Cable                          3.469                           -24K                n/a

Sources: Jackdaw Research, MoffettNathanson

Cord-cutting is accelerating for traditional pay-TV services

While the majority of pay-TV operators posted subscriber gains in the fourth quarter, the metrics were largely propped up by the performance of virtual services. Indeed, AT&T reported gains of 200,000 subscribers for DirecTV Now, which launched on November 30.

Dish Network’s Sling TV, meanwhile, added an estimated 273,000 subscribers in Q4, according to MoffettNathanson, which supplied the graphic below. This chart shows cord-cutting for traditional pay-TV services accelerating to a rate of 1.7% in the fourth quarter vs. 1.1% in Q4 2015.

 

Margins for v-MVPD services aren’t nearly as robust as for traditional pay-TV

While virtual pay-TV services like Sling TV and DirecTV Now provide operators with a path forward in terms of video subscriber growth, ARPU and margins are only a fraction of traditional pay-TV service. The MoffettNathanson chart below illustrates the economics for DirecTV Now’s $50-a-month “Just Right” tier. After programming and infrastructure costs, only $9.59 a month from each customer goes to free cash.

While rising programming costs and competition from over-the-top service providers continues to put pressure on video service margins, cable companies are growing market share quickly in the areas of broadband services, largely at the expense of telco competition. The chart below features Q4 subscriber metrics for residential wireline broadband service. 

How the top 7 U.S. pay-TV operators performed in Q4 in wireline broadband (ranking by subscribers):

                              HSI subs (mil.)       Net adds             Q4 ARPU*

1 Comcast             24,701                   385K                    $47.00
2 Charter              22,593                  356K                    $52.09
3 AT&T                  14,179                      3K                       $49.52
4 Verizon              7,038                        0                         n/a
5 Altice USA         4,167                       45K                      n/a
6 Dish Network     580K                    -13K                      $70.75

Sources: MoffettNathanson, Leichtman Research