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With third-quarter earnings season nearing its end, MoffettNathanson analyst Craig Moffett has calculated pay TV industry-subscriber losses and their implications for the sector.
In a report, he said that the pay TV industry overall lost 179,000 video subscribers in the latest quarter compared with the previous quarter, up from the 83,000 loss in the same quarter of 2013 (but down from 321,000 in the seasonally slowest second quarter). Year-over-year, pay TV subscribers dropped by 0.1 percent, compared with 0.2 percent in the third quarter of 2013, according to Moffett. He compiled the data estimating subscriber trends for privately held cable companies.
DirecTV lost 28,000 U.S. subscribers, and Dish Network lost 12,000, leading to a total satellite TV industry drop of 40,000 in the third quarter. Observers said that was the first-ever third-quarter drop for the satellite TV sector. That compared with a year-ago gain of 174,000 video subscribers for the two companies and a second-quarter loss of 78,000.
Meanwhile, the cable TV industry, including Comcast and others, lost 469,000 subscribers in the third quarter, compared with 657,000 in the year-ago period. Telecom giants Verizon and AT&T continued to add TV subscribers but at a slower pace. Their combined gain of 330,000 compared with 400,000 in the third quarter of 2013.
“Perhaps the most noteworthy trend in the quarter was that the satellite industry appears to have hit a wall,” Moffett wrote. DirecTV and Dish‘s combined subscriber growth over the year-ago period came in at 0.1 percent, “the slowest ever,” he said. “Satellite’s share gains are over.”
Moffett said that at the same time, telecom firms’ gains, for Verizon’s FiOS TV and AT&T’s U-verse, were the slowest ever, but “with growth from both satellite and telco TV ebbing, cable’s losses are slowing.” The 2.4 percent year-over-year subscriber drop in the third quarter was “the industry’s best showing since 2009,” he said.
Discussing the implications for the cord-cutting debate, Moffett wrote: “Cord-cutting remained quiescent. …The trend of a drip, drip, drip loss to cord-cutting remains unchanged.”
With HBO and CBS announcing online-only video services, and Sony, Dish and Verizon planning virtual pay TV offers, the analyst also discussed what they will mean for the pay TV industry. “We expect the pace of experimentation to quicken,” he wrote. “That will inevitably also accelerate what we have consistently described as a drip, drip, drip of cutting.”
Concluded Moffett: “But a faster drip, drip, drip is still a drip, drip, drip. The more dire fears of a seismic disruption still seem highly unlikely.”
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