Wells Fargo analyst Steven Cahall expects cord-cutting to get worse in 2021 despite modest improvements in the first quarter.
Cahall said he now expects pay TV losses to be 6% in 2021, compared to a previous estimate of 5.6%. Cord-cutting was 5.1% in 2020 and 5% in the first quarter.
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“The outlook for pay TV sub declines is as cloudy as ever. We think Q1 trends were modestly better than 4Q20 and 2020 primarily due to less bad satellite losses. Yet, the biggest linear MVPDs are flagging elevated churn while vMVPD subs fell slightly sequentially,” he said in a report Wednesday.
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Cahall noted that direct-to-consumer streaming service subscribers additions are running ahead of expectations and that the streamers will be adding more content in the second half of the year, possibly feeding that trend and spurring cord-cutting.
At the same time Charter and Comcast said on their earnings calls that they expect video sub losses to remain elevated, which would offset continued improvement by the satellite providers.
Cahall said higher cord cutting shouldn’t have a big impact on local broadcast companies, which are looking at better core advertising revenue, potential reverse comp relief from the networks and deregulation.
Fox and AMC Networks would be most at risk among the media stocks because of accelerated cord-cutting because they have fewer direct-to-consumer assets than their rivals, he said.
