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Paid TV subscriptions, including both traditional cable subscriptions as well as streaming services, declined by just 313,000 during the second quarter of 2017, much lower than the 590,000 and 593,000 in the same quarter of 2015 and 2016, respectively.
"Fundamentals have generally been playing out as expected with streaming still growing rapidly (strong NFLX subs)," UBS analysts wrote in a report out August 4. "On a trendline basis, US cable network sector core affiliate rev was +6.3% Y/Y in 1Q17 and is estimated +6.4% in 2Q17 and +6.8% in 3Q17."
But while revenue is doing better than in previous years, traditional distributors are still quickly losing subscribers.
AT&T felt the brunt of these losses, losing 351,000 subscribers last quarter - 46% more than Wall Street analysts expected. Other traditional providers fared slightly better, but the six largest traditional pay TV distributors still managed to lose 709,000 total subscribers in the quarter.
However, these steep losses among traditional subscribers were mitigated by a big rise in virtual subscriptions, which left the industry down a net 313,000 subscribers for the quarter - a number that would have been over triple without them:
UBS
Most TV distributors have already reported earnings for the second quarter, with Scripps Interactive leading the pack and beating analysts' expectations by 2.2%. NBC Universal, Discovery, and Time Warner had slight beats, while AMC and Viacom missed expectations by 3.0% and 2.2%, respectively.
"In our view, the most important event for Media earnings is yet to come," warns UBS. "Which is any commentary next Tuesday night from DIS regarding sub or affiliate trends at ESPN."
Analysts expect Disney to report earnings $1.55 per share after Tuesday's closing bell, according to Bloomberg.