The Impact Of Coronavirus On Cable TV Is Mixed

For the cable industry, the impact of the coronavirus pandemic and subsequent economic downturn comes at a volatile time.

In first quarter 2020, the number of households dropping their cable or satellite TV subscription reached an all-time high, with 1.8 million cancelling their pay TV service. With an average monthly cable bill costing $217.42 and over 40 million applying for unemployment insurance, Kagan forecasts pay TV households will continue to cut the cord, projecting a decline a decline of 11% in 2020. Craig Moffett of MoffettNathanson, in a Variety interview, noted pay TV penetration now stands at 63% of households, the lowest percentage in 25 years.

In addition, in first quarter virtual MVPDs lost subscribers for the first time, despite their “skinny bundles” and lower monthly cost. According to S&P Global Market Intelligence, the number of vMVPD subscribers dropped by 261,000 during the quarter. While Hulu with Live TV and YouTube TV increased their subscriber counts, there were declines from Sling TV and AT&T
T
TV Now, combined with Sony shutting down its PlayStation Vue service. There were 9.2 million vMVPDs subscribers at the end of first quarter 2020.

Another cable threat continues to be the growth and roll-out of new streaming video providers. Netflix
NFLX
remains the most popular; at the end of first quarter, they had 69.9 million subscribers in the U.S. and Canada. Netflix added 2.3 million subscribers to the region during first quarter. Disney Plus, launched in November, had 54.5 million subscribers worldwide as of early May, and Hulu had 32.1 million global subscribers, a year-over-year increase of nearly seven million.

During the pandemic, two new streaming video services were launched: Quibi and AT&T’s HBO Max. Quibi launched on April 6 and has had a sluggish start, with 1.3 million active users. HBO Max was launched on May 27 with over 10,000 hours of content. Next up is Comcast
CMCSA
’s Peacock, set to begin on July 15.

Cord cutting, more competition from streaming video providers, tens of millions out of work, a pandemic which quarantined millions and no live sporting events, have all had an impact on the audience delivery for many cable networks. In comparing primetime viewing (live plus same day) from April-May 2019 (eight weeks ending on May 26) with April-May 2020 (eight weeks ending on May 24, before the death of George Floyd), there are some obvious conclusions with news networks up, sports networks down, as well as a few surprises.

News: With an endless news cycle, it’s no surprise the three vertical news networks continue to be the three highest rated cable networks. Fox News was the top-rated cable network, averaging 3.56 million viewers, a year-over-year increase of 49%. MSNBC ranked second, averaging nearly 1.97 million viewers, a year-over-year increase of 19%. No top-tier cable network got a larger year-over-year boost in viewers, however, than CNN. In April-May, the network grew its year-over-year audience by 125%, averaging 1.72 million viewers, ranking third overall

Sports: On the other end of the spectrum were those networks that rely on sports. No top-tier cable network was more negatively impacted by the pandemic than TNT. Typically, in second quarter, TNT televises dozens of NBA post-season games. With the league postponing the games, TNT’s average audience in primetime dropped by 63%, to 753,000. In May 2019, TNT was the top-rated cable network, averaging 2.5 million primetime viewers. By contrast, in May 2020, TNT’s average audience ranked 13^th overall.

ESPN, another cable network that televises dozens of NBA playoff games in April and May, averaged 888,000 viewers in 2020, a year-over-year decline of 41%. In May 2019, ESPN ranked third among all cable networks (behind TNT and Fox News) but fell to 15^th in May 2020. The audience loss could have been steeper had it not been for the popular documentary The Last Dance, which averaged 5.6 million viewers on ESPN over five weeks in April-May, and the  NFL Draft. Both ESPN and TNT can expect a ratings rebound with the expected return of the NBA postseason scheduled to start on July 31.

Another sports network hit hard by the pandemic was NBC SportsNet. The average audience in April-May 2020 dropped by 87% to 106,000 primetime viewers. During the spring, the network relies on the NHL Stanley Cup playoffs for ratings, which were postponed. The good news for NBC SportsNet is the NHL is expected to restart in the summer. The bad news is the Tokyo Olympics has been postponed until next year.

Discovery Communications: Looking at other cable networks, a few Discovery-owned networks have reported an upswing in ratings since the pandemic. For example, when compared to last year, TLC in April-May increased its audience by 49% and is one of two non-news networks to average over one million viewers (1.23 million). The other cable network averaging over one million viewers is HGTV, which grew its year-over-year audience by 5%, averaging 1.25 million, ranking fourth. Food Network has also reported an upswing in viewing, averaging 885,000 primetime viewers for an increase of 12%. A smaller Discovery-owned network, DIY, reported a year-over-year increase of 57%, averaging over 300,000 viewers. In an interview with Adweek, Jon Steinlauf, the chief U.S. advertising sales officer at Discovery, said, “there tends to be a concentration of viewership around things that people are familiar with, comforted by and trusted.”

Networks Up: Other cable networks performing well in recent months include The Game Show Network, which increased its primetime ratings by 34% in April and May. Hallmark Movies, which relies on “feel good” movies, reported an increase in viewing of 40% from last year. Sundance Channel had a year-over-year increase of 41%. Other top-tier cable networks with notable primetime audience growth include Nat Geo Wild (+57%), BBC America (+21%), Oxygen (+20%), INSP (+17%), BET (+15%) and AMC (+11%). With a volatile stock market, even CNBC’s primetime audience grew by 23% compared to last year. Despite these audience increases; the networks were unable to fully capitalize financially because many marketers curtailed their ad budgets.

Networks Down: A few non-sports networks have also lost a significant amount of audience despite the quarantine. The Disney Channel, which has been in a ratings freefall, dropped by 30%. USA, which also has been struggling to find viewers, had a year-over-year decline in primetime of 27%. Investigation Discovery’s audience dropped by 25%, Animal Planet saw a primetime audience decline of 14%, and Syfy dropped 13%.

Premium Pay: Looking at premium pay cable networks, in April-May 2020, HBO’s primetime audience had one of the largest decreases of any network with a decline of 52% averaging 733,000. One reason for the decline could be the opportunity for viewers to watch such programs as Westworld on other platforms such as on demand, which has been a popular activity in the pandemic. Similarly, the primetime audience for Starz was down by 23% averaging 225,000 viewers. Conversely, Showtime’s year-over-year primetime audience was +16% averaging 384,000 viewers.

The pandemic will quicken some trends already happening in media, including cord-cutting and the popularity and usage of streaming video as an alternative source of entertainment. With many live sporting events expected to return and cable news networks a destination channel for millions, those networks should thrive along with such lifestyle channels such as HGTV and Food. The broad-based entertainment channels are going to struggle finding an audience amidst competition and resources from Disney+, HBO Max, Peacock and others.