Analysts See Pay TV Industry on Track for Q4 Return to Subscriber Growth

4:13 PM PST 02/23/2011 by Georg Szalai

Strong DirecTV customer gains are the latest sign of improved momentum after two consecutive quarters of subscriber declines and a resulting cord-cutting debate.

NEW YORK -- With a slew of satellite and cable TV giants, as well as telecom firms having reported their latest quarterly results, some analysts on Wednesday said they are even more confident that the pay TV industry indeed returned to subscriber growth in the fourth quarter, as many have predicted.

Amid better-than-expected subscriber trends at many pay TV firms so far this earnings season, cord-cutting fears may be put on hold -- for now. For the full year 2010, analysts have also predicted pay TV subscriber gains driven by satellite TV and telecom firms, which have been partially offset by cable declines though.

Satellite TV giant DirecTV posted fourth-quarter U.S. subscriber figures Wednesday that exceeded all estimates. Its 289,000 net customer additions came in ahead of the gain of 246,000 subscribers previously reported by AT&T's U-verse video service and the 182,000 additions by Verizon FiOS.

Taken together, those figures outweigh the 141,000-subscriber decline at Time Warner Cable, a better-than-expected 135,000 loss at Comcast and a 35,000 drop at Cablevision. All in all, big pay TV providers are up by 406,000 subscribers ahead of Thursday's earnings report from Dish Network, Charter Communications' results on Tuesday and the latest quarterly results from small operator Mediacom Communications.

Miller Tabak analyst David Joyce on Wednesday highlighted the strong DirecTV performance as the latest positive sign for the broader industry. "Combined with the better-than-expected losses at the cable operators that have reported fourth-quarter results so far, this could indicate either a record loss of quarterly subscribers for Dish Network, which we do not think is the case, or the return of subscribers to the pay TV market after two quarters of losses due to high unemployment and continued negative housing
formation," he said.

For the pay TV industry overall, he expects a 210,000 gain in the fourth quarter once all key figures are in.

Sanford C. Bernstein analyst Craig Moffett told The Hollywood Reporter that he is also "still expecting a modest gain" for the final quarter of 2010. His detailed forecast was under review as of late Wednesday.

Citadel Securities analyst Vijay Jayant now predicts that the eight publicly traded TV distribution companies will collectively record a gain of about 384,000 subscribers for the fourth quarter, up from his previous estimate of 340,000. That estimate excludes a range of smaller and privately held companies that are expected to drag down overall figures though.

The pay TV industry reported its first declines for the preceding quarters. A third-quarter loss of 130,000 subscribers followed a 246,000 loss in the second quarter.

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