G

AT&T-owned DirecTV appears to be a reason for Uverse's poor video quarter. Source: AT&T.

The results for the third quarter are in, and it's really good news for the subscription pay-TV industry. Based on the results for the largest seven operators in the delivery space, it seems concerns about cord cutting can be put to rest for at least one quarter. And that's good news for investors, especially after last quarter.

If you've been watching this industry, you're probably well aware of the recent trend in cord cutting. Over the past two years or so, a host of journalists have reported that many cable and satellite subscribers have given up on the format. The second quarter appeared to be a tipping point of sorts, as the industry lost a massive 600,000 subscribers.

However, with most pay-TV operators reporting subscriber figures for the recently reported third quarter, including all major providers, the news is decidedly better this period. Out of the seven biggest cable and satellite providers, the losses this quarter were limited to roughly 90,000 subscribers on a quarter-on-quarter basis. Here's a graphic of the larger operators by quarter subscriber adds:

CompanyNet Video Adds
Comcast (48)
Time Warner Cable (7)
Charter 12
Verizon 42
AT&T (Uverse) (92)
DirecTV/AT&T 26
DISH Network (23)
Total (90)

Source: Evercore Associates and quarterly statements (via Fierce Cable).

On the surface, this quarter doesn't appear to be a continuation of the horrible performance the industry had in the second quarter. Digging into the numbers, the quarter appears even better than advertised.

What's going on with Uverse?
AT&T (NYSE:T) is a huge departure from the trend. As a matter of fact, removing AT&T's Uverse from this list would actually lead to subscriber growth, as the 92,000 subscribers is more than the combined loss of 90,000. So, naturally, you'd expect the company to be nervous about its performance compared with its competitors, but you'd be mostly wrong.

And that's because AT&T owns DirecTV, which added 26,000 subscribers. According to the company's third-quarter report, "the company focused on profitability and increasingly emphasized satellite services." Long story short, it seems AT&T is looking to sacrifice fewer profitable subscribers (more on this later) and try to push new subscribers to its DirecTV subsidiary.

Although a 92,000-subscriber loss seems negative, AT&T's Uverse has always been a small part of its total revenue haul, and AT&T is apparently OK with its contribution to the company to further contract.

Profitability is the key to this report
DISH Network
's (NASDAQ:DISH) loss of 23,000 subscribers also appears to be better than it seems. According to a report from The New York Post, this larger-than-average loss was due to CEO Charlie Ergen's seeking to rid his company of "unprofitable" subscribers. Per the article, Ergen mentions that some subscribers would call more than 50 times a month either looking for discounts, upset about the quality of service, or a combination of the two. The article mentions that the company only wants subscribers whp are worth $50 in revenue monthly.

And while it should be noted that DISH's third-quarter earnings report fell short of analyst estimates on the top line, with the company reporting $3.73 billion versus the consensus of $3.79 billion, the company did improve its beat consensus EPS, indicating better-than-expected profitability. More broadly, though, neither company's actions appear consistent with an industry that's afraid of massive subscriber losses. For one quarter, at least, it seems the industry can be worried about the quality of subscribers more so than the quantity of subscribers. 

Jamal Carnette owns shares of AT&T. The Motley Fool recommends Verizon Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.