Verizon VZ +0.3% announced earlier today in their Q. 2 earnings call with analysts and shareholders, that second-quarter revenue fell 5 percent to $30.4 billion. According to Verizon, this was largely because of “declines in wireless equipment revenue in the consumer and business segments, primarily due to limited in-store engagement and the impact of COVID-19 on customer behavior.” Earnings were up in Q.2 from $3.9 billion last year to $4.7 billion for Q. 2 this year.

Verizon said that they had net cancellations of 81,000 pay TV subscribers in the second quarter, which was an accelerating loss in comparison to the same quarter a year ago. In the first quarter of this year Verizon reported a loss of 84,000 pay TV consumers, almost exactly the same amount as this current quarter. Verizon, like other cable and satellite TV providers, have experienced cord-cutting substantially over the last few years and the cord-cutting behavior is still growing.

I conducted a national online study on cord-cutting in June of this year and the data shows even more households intending to cut their pay TV offerings. Many of the cord-cutters have, or will soon buy, Subscription Video On Demand (SVOD) services, like Netflix NFLX +0.6% and Disney Plus, but the traditional full-package cable and satellite providers are suffering from continuing consumer cancellations. Most recently, I saw 8% of pay TV subscribers indicate that they were “very likely” to cut the cord in the U.S. in the next 12 months. In the coveted demographic of 18 to 34 year old consumers, 17% percent said they were very likely to cut the cord which is twice the rate of the U.S. general population. It is not surprising that the 55 and older population are the least likely to say they will cut the cord.

Verizon, and their competitors in the cable and satellite content delivery service business, have suffered for many quarters with consumer cancellations and reductions in their pay TV service. Much of this has been driven by the attractive offerings from the SVOD services, as well as the Free Advertising-supported VOD services, like Pluto and Tubi.

According to a recent report from Goldman Sachs’ lead media analyst Brett Feldman, “Cord-cutting is not new, but it is materially accelerating. At an industry level, pay-TV subscribers have declined on a year over year basis every quarter for the last eight years from a peak of 101 million in 1Q12 to 89 million in 1Q20. This represents an aggregate decline of 11% in household penetration (from 88% to 75%) during this period. While this implies modest annual subscriber declines of only 1-2%, we note that over 50% of these subscriber losses have occurred during the last 12 months, with 1Q20 being the worst-ever quarter of cord-cutting. We believe these pressures on the overall pay-TV market are intensifying.”

Verizon reported that 10,000 new net customers were acquired for their internet access service in Q. 2, which was a smaller growth rate than the 59,000 new internet subscribers signed-up in Q. 1. To a large extent the future success of cable/satellite providers rests with their internet access offerings and related services, as well as “skinny bundles,” which are a smaller selection of channels than the traditional pay TV packages.

Verizon Media, which includes Yahoo and AOL, had revenues of $1.4 billion this quarter, almost 25% below Q. 2 last year. These internet units are largely supported by advertising, and many advertisers have cut back or eliminated advertising expendituresdue to the Covid-19 pandemic.

Even with more consumers at home consuming more TV and internet content, the traditional cable and satellite TV companies have major challenges with their current pay TV subscription offerings.