The return of live sports may temporarily reduce pressure on the cord-cutting cycle of fewer subscribers resulting in higher prices, but another wave of cord cutting "more damaging than the first," may be coming, MoffettNathanson's Craig Moffett wrote investors Wednesday. As people leave traditional pay TV for direct-to-consumer alternatives, the best content follows them, thus helping accelerate cord cutting, he said. The current rate of cord-cutting is 7.7%-8.3% a year, up from 5.4% last year, meaning the traditional pay-TV bushiness could disappear in 12 years, he said. Cord cutting is exploding, but some dropping of cable subscriptions may only be temporary due to the pandemic, CCG Consulting President Doug Dawson blogged Wednesday. Sports "will eventually come back to TV," and sports fans will re-up their subscriptions, he said. As the economy picks up, people also will find it easier to justify the monthly cable subscription, he said. The pandemic's shutdown of creation of new programming content also is hurting subscriptions for now, he said.

Amid shelter-in-place mandates, the largest U.S. pay-TV providers lost about 1.2 million net video subscribers, with Q2 the sixth consecutive quarter of one million-plus net losses. That compares with a net loss of about 2.1 million in Q1 and 1.3 million in the year-ago quarter, said a Wednesday Leichtman Research Group report. Comcast lost 478,000 video subscribers and Cox 50,000; Charter bucked the trend with 94,000 net adds. DirecTV shed 846,000 subs and Dish 40,000. Cable lost half a million video subscribers vs. 455,000 in Q2 2019; top telco providers lost 157,000 vs. 95,000 in Q2 2019, led by Verizon Fios with 80,000 cancellations. Among vMVPD services, Hulu+ Live TV added 100,000 net subscribers while Sling TV and AT&T Now dropped 56,000 and 68,000 subs, it said. Though the pay-TV industry continues to lose subscribers “rapidly,” the wide disparity among top providers in Q2 shows "the significance of individual corporate strategies,” said Bruce Leichtman.

Charter Communications' interconnection market power seems to have increased since its buy of Time Warner Cable and Bright House Networks, so the FCC's finding in approving that deal that Charter would be able to extract excessive interconnection fees is still true, Incompas officials told an aide to Commissioner Geoffrey Starks, said a docket 16-197 ex parte posting Wednesday. Incompas said the flourishing online video distribution market makes it even more likely Charter would extract access fees if the TWC/BHN merger conditions were lifted as Charter asks (see 2006180050). It said the FCC should gather more evidence about how the interconnection market has been affected by conditions on Charter and on AT&T/Time Warner, and by FCC oversight of interconnection agreements during the net neutrality regime. Charter didn't comment.

The requirement cable companies give a 30-day notice to local franchise authorities (LFA) of rate or service changes "is an obsolete artifact" of the cable rate regulation era and an unnecessary burden that should be ended, said a docket 17-105 ex parte posting Tuesday on a meeting between NCTA, Comcast, Charter and Cox representatives and FCC Media Bureau staffers. The cablers said one operator's annual budget for such LFA notifications is $85,000. They said such burdens show why advance notice requirements shouldn't apply if the change comes from circumstances outside the cable operator's control. LFA interests oppose the cable industry push for rollback of LFA notifications requirements (see 2002250005).

The FCC's definition of a cable franchise fee in its 2019 local franchise authority order sits squarely within the Communications Act's framework, and franchising authorities can still require public, educational and government channel access and institutional networks in franchises, though the value of those obligations will count against the franchise fee cap. That's what the commission told the 6th U.S. Circuit Court of Appeals in a reply brief (in Pacer, docket 19-4161) Monday. Citing the franchise fees preemption in the order, the FCC said cable franchise fees paid by the cable operator already compensate the franchising authority for rights-of-way use to operate a cable system that can provide non-cable services, so requiring payment of a second fee for ROW access is contrary to law. The agency is facing a consolidated challenge of the LFA order (see 1909120028). Counsel for the consolidated petitioners didn't comment Tuesday.

No decision has been made on AMC Networks' docket 12-1 petition that the FCC order a standstill of the AMC Networks-AT&T carriage agreement during the pendency of AMC's carriage complaint against the MVPD, the commission told us Monday. Both were filed last week.

Roku opposed Charter's request the FCC end some conditions on the cable operator's past purchases of Bright House Networks and Time Warner Cable, requirements the cabler says are no longer in the public interest. Replies were posted through Friday in docket 16-197. "The bases for the safeguards" were "Charter’s incentives to act anti-competitively post-merger and the absence of viable competition" for broadband, Roku said. "Charter’s petition for relief mentions neither." Roku said those contending the operator's "charitable donations and community involvement might temper Charter’s incentive and ability to act in its own economic self-interest by discriminating against Online Video Distributors" ignore "Charter’s role as a gatekeeper for OVDs and as a monopoly in many broadband access markets." Charter "provided copious data that the marketplace for streaming video" has "exploded" since the 2016 conditions, it replied. "This is exactly what the Commission predicted might happen" when it included "a mechanism to sunset them after five years (instead of automatically after seven)," it noted. A footnote in an attachment by NERA Economic Consulting Managing Director Jeffrey Eisenach said Roku is the most streamed U.S. OVD by hours (see report, Aug. 7 issue). Charter wants to end data caps and interconnection conditions in May (see 2007090009).

Net new broadband subscriptions “blew away” expectations, with stay-at-home orders resulting in the best June quarter results in 15 years, Pivotal Research Group's Jeff Wlodarczak wrote investors Friday. Subs jumped 350% year on year, all from cable, to 1.45 million, with broadband occupied household penetration finishing June at 83.7%. Despite stay-at-home effects, telco net data subscriber losses widened by 30% to 200,000, said PRG. Some 20 million copper-based telco subs are “ripe for cable to steal,” with 35%-50% increases in normalized data usage and data-only homes consuming more than 400 gigabytes of data monthly. Wlodarczak sees “plenty of ability for cable to take price as they move to 10+gig bi-directional capital efficiently which will only benefit from bundling with relatively cheap wireless services.” Pay TV delivered another “ugly” result, losing an estimated 2 million subscribers, said the analyst. The 10% drop was better than forecast and an improvement from the record 2.4 million losses in Q1, likely due to the shutdown and government stimulus payments, he said. VMVPDs shed 1.6 million subscribers, flat with Q2 2019. That pricing model gives consumers “fewer channels at roughly the same price without the quality of service,” said Wlodarczak. Dish Network bled 340,000 subs when it tried to normalize prices, and Google will likely face losses after its 30% hike to $65 for YouTube TV, he said. Cable had a 10% uptick in subscriber losses to 860,000, better than Pivotal’s forecast of minus 1.2 million. Satellite TV lost 900,000; telcos lost 190,000. Wlodarczak attributed accelerating overall pay-TV losses to the increasingly high cost of traditional pay TV, increased commercial loads, “cheap entertainment alternatives,” password sharing and lack of live sports.

An early sunset of FCC data cap and interconnection conditions from Charter Communications' purchase of Time Warner Cable and Bright House Networks would hurt consumers and make broadband access more difficult during the COVID-19 pandemic, said the New York State Public Service Commission in a docket 16-197 posting Thursday. Charter's ask for early relief (see 2006180050) "is ill-timed" given the health crisis and the strong need for broadband for such applications as telecommuting and telehealth, it said. Charter didn't comment.

Stymied by closures that delayed the theatrical debut of Mulan, Disney will fast-track the feature film on Disney+ as a “premier access” stream at $29.99 in most markets beginning Sept. 4, said CEO Bob Chapek on a quarterly call Tuesday. “We see this as an opportunity to bring this incredible film to a broad audience currently unable to go to movie theaters.” Instead of “simply rolling it” into a free offering, “we thought we would give it a try to establish” a new premier access window to “recapture some of that investment,” he said. “We're going to have a chance to learn from this and to see whether that makes sense.” It’s “more important than ever” for Disney to fortify its “direct relationship” with consumers, so it’s launching a “general entertainment” streaming service globally under the Star brand in 2021, said Chapek. Disney’s “full portfolio” of direct-to-consumer services now exceeds 100 million paid subs, said Chapek. As the company battled theater closures and production shutdowns, plus the absence of live sports on ESPN, Q3 earnings per share were 8 cents compared with $1.34 in the year-earlier quarter, said Chapek. “We estimate the adverse impact of COVID-19-related disruption on our third-quarter segment operating income was approximately $3 billion net of cost mitigations,” said Chief Financial Officer Christine McCarthy. The stock closed up 8.8% Wednesday at $127.61.