1. Why Comcast’s Stock Is Up

So Comcast lost 140,000 pay TV subscribers last quarter, as per their last earnings report. All the usual suspects will be shrieking that it's further proof that the TV industry is dying and that anyone who's anyone is "cutting the cord."

Perspective: Comcast has 22.5 million subscribers. Those 140,000 people represent 0.62% of their total subscriber base. In other words, a rounding error.

Why It Matters

Comcast doesn’t make huge profits from pay TV. Much of their profit goes to the various networks in the way of carriage and retrans fees.  Broadband, OTOH, is a huge moneymaker for them, with fixed sunk costs. So that when they charge you an extra $10/month for faster broadband service, it’s almost all profit.

That’s why the fact that Comcast added 260,000 broadband subscribers was so well received by Wall Street.

According to research from MoffatNathanson, around 70% of the viewers who leave traditional pay TV providers like Comcast wind up with virtual providers like DirecTV Now or Hulu Live TV. (Which means that only 0.18% of Comcast’s 22.5 million subscribers actually abandoned pay TV last quarter. In case you were keeping score at home or anything.)

Now all is not 100% flowers and unicorns. There’s 5G looming in the distance which means that the telcos can come in and steal some (even most) of those broadband subscribers. And the fact that Comcast would prefer it if they had gained 160,000 pay TV subscribers instead of losing them. They still don’t seem to have a vMVPD strategy, though some recent moves, as reported in Fast Company, would seem to indicate that they’re looking at moving their well-regarded X1 interface off the set top box.

Sidebar on VMVPDs: there was some noise earlier this week when a Silicon Valley publication reported that the Easter Bunny didn’t really exist—I mean that Google was losing money on YouTube TV.

The fact that all the vMVPDs are losing money because they’re underpricing their services in an attempt to win the most viewers is an open secret in the industry. Nobody thinks that anyone is making money by selling 100 channels for $45, but the goal seems to be to get as many viewers as possible and then gradually boil consumers alive. Or at least charge them more money. The upside is that the vMVPDs have generally been very well received, with users finding the ease of use and breadth of offerings superior to what they’d had on traditional cable even without factoring in the lower price. 

So there’s that—higher vMPVD prices are coming, video at 11.

What You Need To Do About It

If you’re an MVPD, you need to continue to focus on broadband and figuring  out how you can extract value out all the data you’re collecting without running afoul of GDPR. (Sort of like what AT&T is doing.)

If you’re a network, be happy because the combination of MVPDs and vMVPDs means that viewers are still watching your programming, and meanwhile  CPMs are up and so are carriage fees. Your dark clouds are all those under-30s who just aren’t watching a lot of any sort of television anymore. You need to figure out a way to reach them that’s more thought out than “My kids use Snapchat. We’ll run ads on there!”

And if you’re an advertiser just remember the three Ns: No Ad Fraud, No Brand Safety issues, No three-seconds-with-the-sound-off being counted as a “view.” and 

 

2. Why Facebook’s Stock Is Down

As you’ve no doubt heard, Facebook stock took a massive hit this week, losing 19% of its value, a total of $120 billion worth of market capitalization. The alleged reason—Facebook announced that they expected an extended revenue growth slowdown—seemed more like the straw that broke the camel’s back than something people were $120 billion worth of worried about.

Why It Matters

There have been growing doubts about Facebook for a while now as new scandals seem to wash over them daily, everything from Cambridge Analytica and Russian hacking, to Zuckerberg’s Shoah denial gaffe, to the fact that no one under the age of 18 seems to use Facebook much anymore. (Though they are all on Facebook-owned Instagram.)

There’s also the debacle that is Facebook Watch, which comes on the heels of the debacle that was Facebook Live, and what we call the “Madonna Factor”— you can only re-invent yourself so many times and while Facebook’s done a good job of it, their close to 15 year run may well be up.

For the advertisers and publishers who fill Facebook's coffers, there’s a growing sense that Facebook’s leadership has spent its entire life living inside a bubble and can’t fathom a world with really bad people in it, let alone how to deal with them. And that they never quite got why grading their own homework when it came to measurement and calling three seconds with the sound off a “view” was all that bad anyway.

So there’s all that, and it’s a lot, and people were just waiting for a Sarajevo like this last earnings report to start blowing things up.

What You Need To Do About It

Don’t dance on Facebook’s grave. Not just yet anyway. There are still billions of users and billions of vacation photos and memes to be uploaded. This will be a slow-leaking balloon, at least until a viable consumer alternative comes along.

If you’re a network or an advertiser, there’s no time like the present to press your advantage and negotiate a lot harder. Facebook never thought twice about screwing you over, and so now's the time to return the favor.

If you’re a TV network “brand safety issues” and “grading their own homework” area about to become your two favorite phrases.

If you’re Facebook, you might consider hiring an outsider, someone who isn’t part of your greater friend group, someone who knows how much TV shows should cost and can deal with a world filled with lots of really bad people.