SNL Kagan: Pay-TV Industry Shed 650,000 Subs in Q213 Aug, 2015 By: Erik Gruenwedel
Losses driven by record satellite TV sub declines
Cord-cutting is no longer a buzz term for alarmists. More and more pay-TV subscribers are jettisoning pricey channel bundles in search of lower-cost alternatives such as over-the-top video.
SNL Kagan estimates U.S. cable, satellite and telecom operators collectively lost about 650,000 video subscribers in the three months ended June 30, falling to 100.4 million combined residential and commercial subs at mid-year.
The slide, which follows an uncharacteristically weak first quarter, points toward the likelihood of a much larger decline for full-year 2015 than the industry produced between 2010 and 2014, during what could essentially be seen as a period of general malaise.
Specifically, Kagan said the cable industry lost 350,000 video subs, which was actually the lowest quarterly decline since 2008. The telecom industry appeared to trade subscriber gains for improved financials. AT&T U-verse (which merged with DirecTV) and Verizon FiOS realized combined net additions of 4,000 subs for a base of 11.7 million.
Satellite TV generated a record 304,000 sub declines to finish the quarter under 34 million. At the same time, Netflix ended the quarter with nearly 1 million new domestic subs, while Hulu Plus approached the 10 million subscriber milestone. The losses resulted last week (ended Aug. 9) in a brief sell-off and hand wringing on Wall Street surrounding media stocks.
Dish Network CEO Charlie Ergen believes pay-TV operators have lost millions of video subs to OTT video, largely due to indifference. And rushing to downsize the channel bundle is not the answer.
“The Netflix phenomena makes it very difficult to get into that lower-priced [channel] tier and make any money,” Ergen said on Dish’s Aug. 5 call.
As a result, Dish in February launched OTT video service Sling TV, which analysts contend now has about 240,000 subs.