SNL Kagan: Video Subs Decline in Q3

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Multichannel video subscribers declined by about 119,000 in the third quarter, the second straight period of losses for the pay TV sector, according to SNL Kagan research.
The pay TV sector lost about 216,000 customers in the second quarter of this year, according to Kagan estimates, the first time ever for the industry. According to some analysts, publicly traded MSOs actually gained 53,000 customers in the third quarter, but anticipated losses from privately held cable companies were expected to send subscriber growth into negative territory again. In a research report earlier this month, Sanford Bernstein cable and satellite analyst Craig Moffett predicted that Pay TV subscribers would fall by about 108,000 in the quarter.
Kagan estimated that U.S. cable operators shed about 741,000 basic video customers in the third quarter, making it the largest single dip for cable since the research firm began compiling data for the segment in 1980. Kagan estimated that MSO's share of combined video subscribers continued to slide, dropping to 60.3%, versus 62.9% in third-quarter 2009.
Telephone companies managed to continue on a growth trajectory, according to Kagan, adding 476,000 customers in the third quarter. Although still a modest 6.4%, telco market share is steadily rising, up from 4.7% in third-quarter 2009. The DBS industry, which added 145,000 subscribers in the third quarter, is expanding its market share slightly, up less than 1% over the past year to 33.2%.
The third-quarter multichannel market drop-off marks the second consecutive quarter of video subscriber declines.  In the past two quarters combined, the segment has fallen 2.3% to just more than 100 million subscriptions, not eliminating overlap of duplicate subscriptions, according to Kagan.
"Operators are pointing to a continuation of the forces that pushed subscriber gains into negative territory in the second quarter, including the weak economy, high unemployment and elevated churn of former over-the-air households," said SNL Kagan senior analyst Ian Olgeirson in a statement. "However, it is becoming increasingly difficult to dismiss the impact of over-the-top substitution on video subscriber performance, particularly after seeing declines during the period of the year that tends to produce the largest subscriber gains due to seasonal shifts back to television viewing and subscription packages."

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