2025 preview: Will pay-TV finally hit rock bottom?2025 preview: Will pay-TV finally hit rock bottom?

In terms of both declining subscriber numbers and revenues, the traditional pay-TV sector has suffered mightily amid the ongoing shift to streaming and direct-to-consumer (DTC) streaming models.

While it's not yet clear if pay-TV will finally reach rock bottom in 2025 or if subscriber losses will continue or even accelerate, there are clear indications that the sector is approaching an era of M&A and consolidation.

Here are some of the big trends we'll be keeping an eye on in the year to come:

Cable consolidation – maybe not in 2025

It's more than obvious that some of the largest media companies hope to spin off or sell off some of their cable network assets as ad dollars and viewership continue to be siphoned by streaming platforms. Those moves are expected to set the stage for potential acquisitions and mergers, though it's still unclear who will be doing the buying versus the selling – and whether any of those moves will take place in 2025.

Within that group, NBCUniversal is preparing to spin out a sizable portion of its cable network stable while retaining assets such as Peacock and Bravo, a cable network that helps to keep Peacock's content slate stocked.

NBCU's spin-out "makes deal making more likely," MoffettNathanson reckoned in a research note (registration required).

But those analysts don't see any big moves for a while. "To be clear, cable network consolidation through [NBCU's] SpinCo is not imminent and unlikely to play out until at least 2026," MoffettNathanson added.

Warner Bros. Discovery, meanwhile, moved ahead with a restructuring into two divisions – one focused on its legacy cable networks business (TNT, CNN, TBS, Food Network, HGTV, etc.) and the other on streaming (think Max and Discovery+) and its studio assets. WBD said the move, expected for completion by mid-2025, will provide flexibility for "potential future strategic opportunities." However, speculation is that this means the media giant is positioning itself to do some wheeling and dealing later on.

At this point, it appears Disney might not follow suit. The company has expressed interest in looking into a sale of some of its cable networks but made it clear in November that there are no changes anticipated with those assets, at least in the near term.  

Pay-TV's decline: Is there a bottom?

The traditional pay-TV industry continues to go in one direction: down.

Though the pace of pay-TV losses among cable operators, telcos and satellite TV providers has slowed to a degree, it's still not clear if there is a true bottom in terms of how far their subscriber bases will erode.

Once upon a time, it was believed that live sports and news would be the glue that would hold the pay-TV bundle together. But the big bundle is fraying rapidly as live sports, including marquee events and games, migrate to streamers such as Apple, Netflix, Amazon and even media-owned, over-the-top services like Peacock.

Additionally, Venu Sports – the proposed joint venture of Disney, Fox and Warner Bros. Discovery – has proposed a skinny sports-focused bundle. Though Venu's future is being threatened by lawsuits and an injunction, its approach is a clear indicator that skinny sports streaming options could be viable and potentially profitable – and might deliver yet another potential hit to the traditional pay-TV model.

Meanwhile, various forms of news feeds can be seen via a wide range of free, ad-supported streaming television (FAST) services, including The Roku Channel, Tubi and Pluto TV, among others.

Virtual multichannel video programming distribution (vMVPD) options have taken some of the slack, but they have come up well short of replacing all of the subscribers that the traditional pay-TV service providers are losing. In Q2 2024 alone, the "conversion rate" (the rate at which traditional video sub losses are re-captured by vMVPDs) was just 29.2%, according to MoffettNathanson.

Meanwhile, even the vMVPDs are starting to look like the traditional multichannel options they are attempting to replace as their lineups become more bloated and their prices rise. YouTube TV, a bright spot in the pay-TV world, has effectively become just another pricey option in the wake of a recent $10 price increase that raises the baseline service cost to $82.99. That's a far cry from the $35 per month YouTube TV was charging when it launched in 2017.

More cable operators will exit pay-TV

The challenges of the pay-TV market will continue to force the hands of cable operators in 2025 and determine their role in the video game going forward.

It's clear that major US operators such as Comcast and Charter Communications will stay in the game. Comcast will rely on X1 as its marquee pay-TV platform, use its relatively new prepaid Now-branded video offering to hit the lower end of the market, and tap into its Xumo partnership with Charter to bring video options to broadband-only customers. Charter, meanwhile, will tap Xumo as its go-to platform for new video customers and continue to enhance its pay-TV service with bundled, ad-supported third-party streaming services from the likes of Disney, Warner Bros. Discovery and NBCUniversal.

But the midsized and small cable operators will take much different approaches, with a growing subsection of them ceding all video to streaming options.

The big one on the horizon is GCI. Alaska's largest cable operator plans to shut down its pay-TV service by mid-2025. Though some midsized operators will upgrade to IP- and app-based options of their own or add packaging flexibility using a new, slimmed-down, entertainment-focused programming tier from the National Content & Technology Cooperative (NCTC) called "Broadband TV," expect a greater number of operators to take GCI's route in 2025.

Here's a sampling of pay-TV and streaming headlines from the past year: