Kagan: Cord-Cutters Drive Pay TV Losses to 625K

Cable Has Best Q2 Since 2008
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A sharp rise in cord-cutters during the second quarter helped drive pay TV customer losses to record highs in the period with the industry losing about 625,000 subscribers in the period, according to SNL Kagan.

According to Kagan, the losses were the heaviest to date, as total pay TV customers dropped to 100.4 million in the period. The losses were mainly driven by sharp declines at satellite TV and telco TV companies, who usually take up the slack for cable losses. Ironically, cable, which has been the focus of much of the cord-cutting hysteria over the past several months, had its best second quarter since 2008 according to Kagan, shedding about 350,000 basic customers. Cable operators lost about 211,000 basic customers in Q2 2008 and on average have shed 609,000 subscribers in the second quarter.

While the second quarter is a traditionally weak one as college students leave school and customers disconnect service as they move to summer residences, Kagan said the slide follows an uncharacteristically weak first quarter, when total subscribers were down by 26,000. That could point toward the possibility of a much larger decline for the full year than during 2010-2014, which was, according to Kagan, “a period of general malaise.”

Kagan’s numbers are slightly higher than previous estimates by MoffettNathanson principal and senior analyst Craig Moffett, who said declines were about 566,000 in the quarter.

Other highlights from the Kagan report include:

  •  Telcos increasingly appear to be trading subscriber gains for improved financials. AT&T's U-verse has aligned its strategy with DirecTV’s focus on profitability. As a result of the belt tightening, the combined multichannel video subscribers served by FiOS and U-verse were flat at 11.7 million at the end of the second quarter, behind net adds of just 4,000. 
  • The DBS segment lost an estimated 304,000 subscribers, as DirecTV and Dish Network both reported record declines. The DBS segment retreated to just under 34 million subs, according to Kagan.   

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