US Pay-TV Providers Pile Up New Losses

Alan Breznick
News Analysis
Alan Breznick, Cable/Video Practice Leader, Light Reading

Despite notable improvements in the critical cable sector, the US pay-TV industry lost video subscribers for the second straight year in 2014 as its customer base continues to erode slowly but surely.

In its latest report, Leichtman Research Group Inc. (LRG) found that the 13 largest US pay-TV providers, representing 95% of the nation's total multichannel video market, collectively lost another 125,000 video subscribers in 2014. That comes on top of a loss of 95,000 video subs in 2013.

As a result, the top 13 providers closed last year with a total of 95.2 million video customers, off more than 200,000 from their peak at the end of 2012: The US pay-TV market has clearly hit the saturation point after more than 60 years of consistent, often strong, growth.

But Bruce Leichtman, president and principal analyst of LRG, doesn't see any big red flags in the numbers yet because the subscriber losses have been quite "modest' so far. "Despite a relatively saturated market and increasing alternatives for consumers to watch video, the top pay-TV providers have only lost about 0.2% of all subscribers over the past two years," he said.

Notably, US cable operators enjoyed their strongest year since 2008, cutting their subscriber losses substantially from 2013. Still, the nation's top nine MSOs collectively shed nearly 1.2 million video customers last year. While that was an improvement over the 1.7 million video subs they shed the previous year, the performance was still not exactly something to write home about.

As in 2013, Time Warner Cable Inc. (NYSE: TWC) led the way down, losing slightly more than 400,000 video subscribers last year. None of the other large MSOs lost even half as much. Although about twice as big as TWC, Comcast Corp. (Nasdaq: CMCSA, CMCSK) lost "only" 194,000 video subs last year as it continues to roll out its popular X1 IP video platform and such advanced video services as cloud DVR. (See Comcast Weighs WiFi Plans.)

Want to learn more about pay-TV industry trends and next-gen technologies? Then check out the agenda for our upcoming Cable Next-Gen Technologies & Strategies event, Tuesday, March 17, 2015, at The Cable Center in Denver.

The nation's two biggest telcos, AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ), continued to gain ground on the video front last year, albeit at a slower pace. Between them, they picked up almost 1.1 million video subs for their respective U-verse and FiOS fiber-fed services in 2014, down from more than 1.4 million subs a year earlier.

In contrast, the two big US satellite TV providers, DirecTV Group Inc. (NYSE: DTV) and Dish Network LLC (Nasdaq: DISH), appear to have maxed out on customer growth. They added a mere 20,000 video subscribers between them last year, as a 79,000-sub loss by Dish nearly offset a 99,000-sub gain by DirecTV.

With the various shifts by the main players, cable's leading share of the pay-TV market continued to decline, dropping to just over 50%. The nine biggest cable operators ended the year with 49.3 million video subscribers, followed by the two satellite providers with 34.3 million and the two telcos with 11.6 million.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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