Q2 Video Scorecard: The Winningest Losers
The U.S. pay-TV industry took it on the chin in the second quarter as the cable operators, satellite TV guys and telcos combined lost 418,000 customers in a period that's always marred by so-called "seasonality" as students and snowbirds turn off services and flee for the summer.
The reactions to these results have been mixed. Some see it as more proof of cord-cutting, while the more optimistic, like Sanford C. Bernstein & Co. Inc.'s Craig Moffett, believe it could've been a lot worse, and that the pay-TV industry actually held its own, improving on the year-ago quarter's net loss of 440,000 video subs.
Among providers, cable of course got hit the hardest, losing 616,000 video subs in the quarter, but 93,000 fewer than the 709,000 lost in the year-ago quarter, according to Bernstein's analysis.
Save for Time Warner Cable Inc., other publicly held U.S. cable operators lost fewer video customers in the quarter than they did in the year-ago period. Overall, it was the fifth consecutive quarter of year-over-year improvement for the industry in the category. While that's a positive recent trend of sorts for cable, which is still bleeding customers each quarter, it's not yet something to really crow about.
The satellite guys pulled off a dubious first as both DirecTV Group Inc. and Dish Network Corp. lost video subs in the same quarter for the first time ever. The silver lining was that Dish's 10,000 video sub losses were well better than the 100,000 losses expected by analysts, while DirecTV countered dismal U.S. results with record subscriber growth in Latin America. Together, the satellite TV guys still combined to shed 47,000 fewer subs than the year before.
AT&T Inc. and Verizon Communications Inc. provided some balance by adding a combined 275,000 video subs, but it was a weak showing, considering they added 386,000 subs in the year-ago period. Here's a snapshot of how the numbers stacked up across providers:
Table 1: Pay-TV Net Adds
| Company | Q2 2012 | Q2 2011 | Q1 2012 |
| Comcast | -176,000 | -238,000 | -37,000 |
| Time Warner Cable | -169,000 | -128,000 | -90,000 |
| Charter Communications | -72,000 | -83,000 | -27,000 |
| Cablevision Systems | No change | -23,000 | +7,000 |
| Other cable | -199,000 | -237,000 | -53,000 |
| DirecTV | -52,000 | +26,000 | +81,000 |
| Dish Network | -10,000 | -135,000 | +104,000 |
| Verizon Communications | +120,000 | +184,000 | +180,000 |
| AT&T | +155,000 | +202,000 | +200,000 |
| Other telco | -15,000 | -8,000 | +10,000 |
| Total | -418,000 | -440,000 | +429,000 |
| Source: Sanford C. Bernstein and the companies. | |||
Cord-cutting trends
While pay-TV could have had much worse showing in the typically rough second quarter, the totals, when combined with other market trends, did fan the cord-cutting flames a bit. Moffett notes that when he factors in the current pay-TV growth rate with the rate of new household formation, it does suggest that "yes, there are homes that are cutting the cord."
But he says it's still unclear if that trend is being driven by online video options or, as he sees it, if it's mainly a function of consumer belt-tightening.
But count Dish Chairman Charlie Ergen among the cord-cutting believers. "I personally think it's happening," he said Wednesday on the company's earnings call.
— Jeff Baumgartner, Site Editor, Light Reading Cable
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