Media

Pay TV Subscriber Numbers Slide

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The number of subscribers to cable, satellite and telecom video programming fell by 366,000 in the second quarter of 2013, according to research firm SNL Kagan. The summertime drop was not unexpected, and the better news for the pay TV companies is that the quarterly loss was 11% smaller than the loss in the second quarter of 2012.

As a whole the industry’s subscriber numbers are about 200,000 below the same period a year ago, and SNL Kagan estimates that the total number of subscribers is about 121,000 higher than at the end of the second quarter of 2011. How bad was it?

SNL Kagan noted that cable outfits like Comcast Corp. (NASDAQ: CMCSA), Time Warner Cable (NYSE: TWC) and Cablevision Corp. (NYSE: CVC) saw subscriber losses double to 607,000. Cable’s share of the pay TV market has now fallen to 55.3%.

Satellite providers like Dish Network Corp. (NASDAQ: DISH) and DirecTV (NASDAQ: DTV) saw a drop of 162,000 in the quarter and appear stuck at a total audience of around 34 million. The satellite companies actually have seen a slight uptick in subscriber numbers over the past 12 months.

Telecom providers like AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) continue to snatch market share from both the cable and the satellite operators. The telecom programmers added 400,000 subscribers, substantially more than in the second quarter a year ago. The telecom companies now claim 10.7 million subscribers, according to SNL Kagan.

The recent spat between Time Warner Cable and CBS Corp. (NYSE: CBS) that resulted in a month-long blackout of CBS stations from Time Warner in several markets over a dispute on retransmission fees is yet another signal that traditional cable and satellite providers may be suffering more than we think. CBS was reportedly demanding a payment of $2 a month per subscriber and Time Warner was offering $1 or less.

As subscriber numbers decline, remaining viewers may have to pay more to meet the demands of networks like CBS on cable companies. That will cause more defections and put even more of a squeeze on the cable operators. Satellite providers face the same issues, and the telecom companies also are likely to begin feeling the effects of network demands for higher retransmission fees. It is indeed a brave new world.

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