After years of insisting otherwise, investors seem to have decided that the pay TV business is in decline. Last week, triggered by an admission of weakness from Disney and ESPN, Wall Street pounded all of the big media companies, wiping out more than $50 billion in value.
You can debate whether the selloff was an overreaction, or if certain companies are in better shape than others. But here’s a convincing argument for the overall thesis, delivered via a chart from researchers MoffettNathanson:
To spell it out: Pay TV subscriber growth has been tailing off for years, and now it has vanished altogether — the number of people who pay for cable TV, satellite TV or telco TV is shrinking.
Per analysts Craig Moffett and Michael Nathanson: “A year ago, the Pay TV sector was shrinking at an annual rate of 0.1 percent. A year later, the rate at which the Pay TV sector is declining has quickened to 0.7 percent year-over-year. That may not seem like a mass exodus, but it is a big change in a short period of time. And the rate of decline is still accelerating.”
Again: There are plenty of reasons to argue why the TV business is not the newspaper business, or the music business. For starters, many people consume an enormous amount of TV every week, and something like 100 million people pay (a lot) of money for TV every month.
They’re probably going to keep doing that, in one form or another, for a long time.
But the notion that the TV Industrial Complex could fend off the Internet without changing the way it sells its product to consumers and advertisers clearly doesn’t hold water anymore.
Next question: What do the TV guys do now?
This article originally appeared on Recode.net.