SNL Kagan: TV Subscribers Down for Second Consecutive Quarter
NEW YORK - Research firm SNL Kagan made it official on Wednesday - the U.S. multichannel TV industry experienced its second subscriber decline in the third quarter following a drop in the second quarter.
And one of its analysts weighed in on the cord cutting debate that has gripped the industry, suggesting that it is real and that new online video, or so-called over-the-top, options may indeed play a role in the trend and make it a fundamental challenge for cable operators.
Cable executives on the other hand have pointed to a weak economy and other factors - such as accelerated growth in last year's digital TV transition that saw customers sign up, often thanks to special promotions, that are now in some cases leaving - as key drivers of what they argue will be a temporary phenomenon.
Total industry subscriber count fell by 119,000 customers in the third quarter, compared with a 346,000 gain in the year-ago period. For the second quarter, it had recorded a decline of 216,000.
The culprit were cable operators, which lost 741,000 basic video customers in third quarter, the single largest quarterly drop for cable since SNL Kagan began compiling data in 1980.
Telecom firms added 476,000 customers, and satellite TV providers added 145,000 subscribers, according to SNL Kagan.
"Operators are pointing to a continuation of the forces that pushed subscriber gains into negative territory in the second quarter, including the weak economy, high unemployment and elevated churn of former over-the-air households,” said SNL Kagan analyst Ian Olgeirson. “However, it is becoming increasingly difficult to dismiss the impact of over-the-top substitution on video subscriber performance, particularly after seeing declines during the period of the year that tends to produce the largest subscriber gains due to seasonal shifts back to television viewing and subscription packages.”
In an event organized by the Paley Center for Media, Time Warner chairman and CEO was asked about the second straight pay TV subscriber decline.
Citing heated competition for subscribers between cable, satellite and telecom firms, he said there could be a situation where people could cut their cable suscription cord. But he also highlighted the current recession as a key driving force. The good news for cable network owners like TW though is that the overall long-term trend has been up in subscribers, advertising revenue and the like.