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Per a tally from Leichtman Research Group on Nov. 14, the largest pay-TV providers in the U.S. saw a loss of 785,000 net video subscribers in 3Q 2022, compared to a loss of 650,000 in 3Q 2021. Comcast suffered the biggest drop in pay TV subscribers with 560,000, as Charter (-204,000), DirecTV (-400,000) and Dish (-184,000) all saw declines as well.
Some of that pain is already being felt by the David Zaslav-led Warner Bros. Discovery, as well as Disney, which have not yet been able to rely on their nascent streaming services to make up the difference.
While Disney grew its subscriber numbers last quarter, adding 12.1 million subscribers to reach 164.2 million on Disney+, financially its streaming side recorded its biggest loss yet, at $1.47 billion. Disney CEO Bob Chapek has said that this will be the peak loss for this segment and that the company is still on track to reach profitability for its streaming service starting in fiscal year 2024.
But the loss comes as linear revenue at Disney continues to decline, falling 5 percent year-over-year to reach $6.3 billion in the most recent quarter. And as Moffett Nathanson analysts noted last week, Disney’s fiscal year 2023 guidance came in below expectations, suggesting an accelerated decline coming in linear.
“Just a few months ago, Disney’s now ex-CEO Iger stated ‘linear TV and satellite is marching towards a great precipice and it will be pushed off.’ With Disney management’s FY 2023 guidance, it appears that that cliff may be closer than any of us thought,” analyst Michael Nathanson wrote.
Warner Bros. Discovery also saw a decrease in linear revenue in its most recent quarter, with advertising revenue decreasing 8 percent due to a drop in viewership among general entertainment and news programming, as well as comparison to 2021, which saw the Olympic Games in Europe. Content revenue also fell 37 percent year-over-year due to the loss of that programming.
The company’s two streaming services are gaining subscribers, with HBO Max and Discovery+ growing to 92.1 million subscribers in the quarter. Zaslav plans to combine the two into one merged streaming service, now set to launch in spring 2023, and also plans to launch an ad-supported tier.
But until then, Warner Bros. Discovery is not only grappling with the drop in linear, but also the costs associated with combining the two companies. WBD reported earnings of $9.8 billion and a loss of $2.3 billion in the third quarter.
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