U.S. Pay-TV Subscriber Numbers Up for 2012, Fourth Quarter

satellite dishes - H 2013
Getty Images

CEOs have continued to shrug off suggestions of major cord cutting or shaving.

Big publicly-traded U.S. pay-TV operators on a combined basis once again added video subscribers in the fourth quarter, with analysts also predicting another slight gain for the industry for the full year 2012.

Data disclosed in earnings reports so far shows a continuation of trends of last year, with absolute pay-TV subscriber figures up slightly, but gains falling behind the number of new households started in the country, according to analysts. They said the data likely won't add new fuel to the so-called cord cutting debate, which has seen industry folks discuss whether consumers are increasingly dropping their pay TV services in favor of online alternatives -- whether for economic or other reasons.

CEOs at a conference early this week continued to shrug off suggestions of major cord cutting or shaving, meaning a reduction in the pay-TV services consumers subscribe to.

"You don't see evidence of cord cutting or even cord shaving," Time Warner chairman and CEO Jeff Bewkes said Monday at the Deutsche Bank 2013 Media, Internet & Telecom Conference in Palm Beach, Fla.

Comcast Cable CEO Neil Smit, meanwhile, highlighted that his company's pay-TV subscriber losses have narrowed for nine straight quarters, and the fourth-quarter loss of 7,000 would have been a gain when excluding the impact of Hurricane Sandy. While he didn't say when Comcast could return to pay-TV subscriber growth, he said: "We are investing behind it, and I believe there is a lot more coming in video."

Satellite TV giants DirecTV and Dish, telecom firms Verizon and AT&T and cable companies like Comcast, Time Warner Cable, Cablevision Systems and Charter Communications have already reported their pay TV subscriber data for the final quarter of 2012. On a combined basis, they show a gain of about 220,000 pay TV subscribers before adding in privately held companies, which have often lost customers as a group in recent quarters. The gain is down from more than 300,000 in the fourth quarter of 2011.

For 2012, the data from public companies so far points to a gain of around 500,000 subscribers, but that figure is expected to come in lower once privately-held firms are included, according to analysts. For the full year 2011, the total pay-TV industry had added 280,000 subscribers, according to SNL Kagan.

While DirecTV, AT&T and Verizon posted lower pay-TV subscriber growth in 2012 than in 2011, Dish swung back to a gain, and Comcast and others narrowed their losses.

SNL Kagan analyst Ian Olgeirson said fourth-quarter and full-year 2012 figures have yet to be finalized, but he doesn't expect big surprises or new trends.

"The fourth-quarter net adds will be lower than a year ago with softness spread across the three major platforms," he told THR though. "The absolute number of subscribers continues to rise on an annual basis, but on a relative basis we are seeing persistent declines in the percentage of households in the U.S. that are taking a multi-channel service."

Some have coined the term "cord avoiders" for -- mostly younger -- people who form a new household, but don't sign up for pay-TV services.

Summarized Olgeirson: "In other words, the trends are fairly consistent with what we have seen in the previous couple of years."

Evercore Partners analyst Bryan Kraft estimates that the pay TV industry gained about 125,000 video subscribers in the fourth quarter, down from about 200,000 in the same period of 2011.

"On a base of about 104 million subscribers, it's a very small change," he said. "I would say that the year-over-year change was about the same. We've seen pay-TV penetration decline modestly since its peak in 2009 (when it spiked because of the digital broadcast transition), while net adds have stayed marginally positive." 

He estimated that pay-TV penetration of total U.S. homes peaked at 85.5 percent in 2009, but that has dropped to about 84.4 percent now.

Meanwhile, a recent report about Western European pay-TV trends highlighted that the region saw its first-ever subscriber decline in 2012. In the report, which could kick off a cord-cutting debate in Europe, research firm Informa cited more than 380,000 pay-TV customer losses in Western Europe, with a U.K. gain unable to offset big drops in Spain and Italy.

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