Report: Subscribers
are cutting cable lines
SNL Kagan says subscriptions were down by 711,000 in Q2
By Louisa Ada Seltzer
Aug 24, 2010
The multichannel pay-TV business shrank for the first time ever during second quarter, suggesting that customers were canceling their subscriptions to save money during these rocky economic times.
The marketplace lost a net 216,000 subscriptions during second quarter, compared to a gain of 378,000 during second quarter of last year, according to a report released yesterday by SNL Kagan.
Overall cable, satellite and telco video subscriptions declined to 100.1 million, with six of eight cable multi-system operators reporting their worst quarterly video losses ever. Cable subscriptions dropped by 711,000, its worst-ever quarterly decline.
The dip would have been much steeper if not for the gains by satellite and telcos that helped offset the cable declines, likely because some customers were wooed away via cheaper deals offered by the alternative delivery systems.
DBS (direct broadcast satellite) was up 81,000, and telco, including Verizon's FiOS and AT&T's U-verse rose 414,000.
People have been cancelling their cable subscriptions for several years, but the pace has picked up over the past two years. Only 217,000 people dropped their subscriptions during the same quarter two years ago.
That's allowed telcos and DBS to gain share in the overall marketplace while cable loses share. Cable was down to 61 percent during second quarter, from 63.6 percent the year before, and telco was up to 6 percent. DBS gained less than a percentage point.
In addition to the economy, last year's digital transition also played a part in the higher cable churn.
"We believe economic factors such as low housing formation and a high unemployment rate contributed to subscriber declines in the second quarter,” said SNL Kagan Analyst Mariam Rondeli. “We are also seeing churn resulting from the broadcast digital transition, which boosted video uptake early last year, as many have abandoned their paid subscriptions once initial promotional contracts expired.”
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