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Cord-Cutting Reaching an All-Time High: 'Man the Lifeboats!'

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Despite stories suggesting the rate of cord-cutting is slowing, it's gearing up for an all-time high. In a letter to subscribers, senior research analyst Michael Nathanson of MoffetNathanson forecasts that cord-cutting will grow to 5.5% in Q2 2019, which will be the highest the rate has ever been. "All-in cord-cutting" (which factors back in cord-cutters who then sign up for vMVPD service) will be 2.7%, which will also be a record. Don't look for this to mark a turnaround point, as he believes the final two quarters of 2019 will also see record cord-cutting.

With the acceleration of cord-cutting, broadcast and cable companies are able to reach fewer households, diminishing their appeal to advertisers. In Q2 2014, Nathanson says, the average broadcast network could reach 77.1% of adults 18 and over. Today, that number has dropped to 60.2%. For cable networks, the rate fell from 19.5% to 12.5%.

Disney and Fox are doing the best job of preparing for changing conditions, and the researcher gives both a Buy rating. For the rest, he sounds the alarm.

"While we applaud our companies’ efforts to turn their stories around and build their respective lifeboats for the future, the data points should raise serious concern over the rate of decay of the traditional ecosystem. Man the lifeboats!" Nathanson says.

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