Pay TV Providers Lost 700,000 Subscribers Last Quarter While the cable industry has been trying to imply it has cord cutting on the ropes, second quarter earnings reports paint a very different picture. MoffettNathanson analyst Craig Moffett estimates that the pay TV sector lost 757,000 subcribers in the second quarter, or 708,000 if Dish Network's Sling TV subscribers (now factored in to quarterly subscriber totals) are included. In short, pay TV lost 1.3% of its video base in the second quarter, after losing 1.2% in the first quarter.

It was the telcos that were hit hardest, losing 529,000 video customers on the quarter. Verizon was hit especially hard, in part due to the protracted strike of union employees. And while DirecTV added an impressive 342,000 subscribers on the quarter, the numbers also indicate that AT&T's U-Verse TV platform lost 391,000 subscribers, giving the company a net loss of 49,000 video subscribers during the second quarter. But Dish Network was hit the hardest, losing 281,000 subscribers last quarter, a total that included Sling TV additions. That's partially thanks to cord cutting, but it's also thanks to Dish's unique ability to bicker with broadcasters over carriage fees and other programming hikes. “The gap between cord-cutting, or eliminating one’s pay-TV subscription altogether, and cord-shaving, where skinny bundles replace fat ones, is getting wider,” Moffett said in a research note. Cable fared a bit better overall, collectively losing "only" 242,000 subscribers during the second quarter. As we've explained that's in large part thanks to cable's ability to lure frustrated, un-upgraded DSL customers with faster speeds. With cable and TV bundles costing less than broadband alone, many of these subscribers sign up for TV service they may not even want. This occasionally gets confused with the idea that cable providers have successfully defeated the cord cutting/trimming menace. Moffett has consistently argued that the numbers are actually worse when you factor in how the housing market rebounded without a corresponding spike in pay TV subscriptions, suggesting that when many people move -- they aren't reconnecting traditional cable. Moffett's research note also took aim at subscriber tracking metrics in a TV industry that hasn't always been receptive to a candid look at the numbers. “The pay-TV industry is struggling with a measurement problem,” he said. “The most commonly cited numbers are Nielsen’s estimates of cable network subscribers.” "Company-reported numbers are, by contrast, lagged 30 to 90 days (based on the payables from their distributors), making changes in trend a bit harder to discern," said Moffett. "And Nielsen’s numbers don’t include new OTT distributors like Sling and Sony Vue, which at this point, may represent 800,000 subscribers." Instead of heeding the warnings, many cable providers have simply doubled down on rate hikes, while often paying empty lip service to cheaper, more flexible pay TV viewing options. Instead of heeding the warnings, many cable providers have simply doubled down on rate hikes, while often paying empty lip service to cheaper, more flexible pay TV viewing options.







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Most recommended from 48 comments



maartena

Elmo

Premium Member

join:2002-05-10

Orange, CA 9 recommendations maartena Premium Member It's a trend... Every month I see posts in a local city Facebook group: "Thinking of stopping cable because it's too expensive." , "Just got a letter from provider X that price will increase again. Can I switch over to Netflix and Hulu completely?". - And these are not from young people either, young people don't even bother subscribing to cable in the first place. These are from people who have had cable for a long time, and the price point is now getting to a number that they would consider dropping it. These are people that would still pay for cable if it was $50 flat like it was 15 years or so ago.



The cable companies introduced digital cable at that time, and created a digital package that was cheaper than the analog one, even with the new fangled digital tuner box you needed. It was only a little more expensive if you wanted DVR. Fast forward to 2016, and cable has become a fat cash slurper, sucking your wallet dry. Tuner boxes cost $10 per TV. DVR cost $10 on top of that. There are broadcast "surcharges". Sports "surcharges". And both of those combined can be as high as $10 these days.



The milking of customers really started around 2009-ish or so.. the 2007 economic crash caused a lot of companies to no longer advertise in 2008-ish, tightening their advertising budgets. I remember seeing an increased number of local cable TWC commercials as fillers because they did not sell all slots. Cable companies lost money. But did they slow down? No... instead of realizing that they were in an economic slowdown, they started devising a strategy to ensure that they would continue to reap profits. And at the same time the media companies did the same when asking for fees from cable companies. And the end-result is that since 2009 or so, the average yearly increase of a cable subscription is somewhere around 5 to 8%, while inflation in the last 10 years has between 0.1% and 2.5% on average, with one exception, the inflation in 2008 was 4%.



In short: Cable subscriptions are rising in price at TWICE the rate of inflation. The defense "yeah but everything is getting more expensive" doesn't really apply. Those price hikes are going directly into the pockets of the big media companies and big cable executives. Unfortunately for the cable exec's yachts, the people are starting to catch on. They are starting to realize that cable isn't the only one providing entertainment anymore, and they are starting to realize you can actually live without them completely and still get a daily dose of screen watching.



Once sports opens the doors for people to watch it without cable (and for the major leagues this is already true, but college sports are still not streamed.... and NFL streaming is only for DirecTV/ATT customers) we'll see a much bigger exodus of customers.



For me, it became a question between: "Keep sports" - and "Pocket $1,000 a year". And sports wasn't worth a thousand dollars a year for me. And it still isn't, 2 and a half years in.

syslock

Premium Member

join:2007-02-03

La La Land 8 recommendations syslock Premium Member No Surprise Would you pay for garbage content and info mercials?

Nope. If there is nothing good to watch, people are not going to pay for it.



They have moved on to other sources of content and happy to pay for it.

karpodiem

Hail to The Victors

Premium Member

join:2008-05-20

Troy, MI 6 recommendations karpodiem Premium Member people are opting out of the TV racket and the remaining customers are being squeezed for every penny.

ARGONAUT

Have a nice day.

Premium Member

join:2006-01-24

New Albany, IN 5 recommendations ARGONAUT Premium Member TV Sucks. They had a chance to go à la carte and said no. The important thing is the CEO will still get his 368 percent raise.

Packeteers

Premium Member

join:2005-06-18

Forest Hills, NY ·Verizon FiOS

·Charter

Asus RT-AC3100

(Software) Asuswrt-Merlin

5 recommendations Packeteers Premium Member i find these loses amusing



until they restructure and reprice their offerings, the subscription bleeding will continue.



de'nile is a river in egypt... i'm starting to convert my 4th neighbor to a cord cutter - cabletv fossils just don't get it.until they restructure and reprice their offerings, the subscription bleeding will continue.de'nile is a river in egypt... HiDesert

join:2008-08-17 3 recommendations HiDesert Member GOOD Basically, the system of carriage extortion is a racket. Consumers have Zero protection against content providers hiking up carriages through channel bundling except cutting the cord. I've said this for years. We need to cut the cord in mass to make it clear we want change and fair pricing for content. When another 20 million cut the cord they might start to get the message that price thresholds have hit a wall. And with younger generations not buying in, these content providers are facing a losing battle moving forward. And many of the younger crowd are not even buying into cable and dsl options.. So hiking predatory rates for those services won't work either being all they have is cell service. Greed will be their undoing. Consumers will only tolerate bi annual rate hikes for so long.