Verizon Adds Fewer Pay TV Subs in Second Quarter

5:17 AM PST 07/19/2012 by Georg Szalai

UPDATED: The telecom giant saw its user growth momentum in the seasonally slow quarter slow compared to the year-ago period, with one analyst wondering what that will mean for competitors' sub growth.

Telecom giant Verizon on Thursday said it added 120,000 FiOS pay TV subscribers in the second quarter, a year-over-year decline in growth momentum.

That brought the company's total pay TV customer base to 4.5 million as of June 30.

The latest user gain compared with 184,000 in the same period a year earlier. Verizon management on its earnings call highlighted a recent focus on profitability partly driven by price increases, which tend to hurt subcriber growth.

Barclays Capital analyst James Ratcliffe had forecast that Verizon would add 150,000 FiOS TV users in the latest quarter. The second quarter is seasonally slow for pay TV firms as students disconnect service over the summer and people move to summer houses.

Kicking off earnings season for cable TV, satellite TV and telecom firms, Verizon also said that it added 134,000 FiOS broadband subscribers. Ratcliffe had predicted a gain of 200,000, partially offset by a loss of 110,000 DSL customers. The company's total Internet user base now amounts to 5.1 million.

"The second quarter is a seasonally weak quarter for sub trends and stock price performance" in the pay TV sector, Wells Fargo analyst Marci Ryvicker said ahead of the earnings parade. "That said, we think expectations are more moderate post an unexciting first quarter."

After the Verizon report, she wondered what the results would mean for other pay TV firms. On the one hand, Verizon's weaker growth "could be good for the cable companies," she said. "In particular, Cablevision may have benefited the most from a sub perspective."

But she also warned that it could be a sign of bad sub news across the sector. "The entire sector may be suffering from exaggerated seasonality, which could mean sub numbers come in below expectations," Ryvicker said.  

Email: Georg.Szalai@thr.com
Twitter: @georgszalai

comments powered by Disqus