U.S. cable, satellite providers slump in period, while telco TV remained strong
Internet video services may have significantly put the hurt on U.S. cable and satellite TV companies in the first quarter, as big ops posted their weakest subscriber results in four years.
Overall, the sector added gained 176,000 subscribers in the first three months, according to Citigroup analyst Jason Bazinet. Meanwhile, the two biggest Internet streaming-video subscription services — Netflix and Hulu Plus — racked up more than 3 million in the period.
Q1 is historically one of the strongest periods for pay TV providers. But the 176,000 net adds in the most recent quarter came in at less than half the totals for the sector in the previous three years, according to Bazinet’s calculations. The industry added 403,000 in the first quarter of 2012; 483,000 in Q1 2011; and 507,000 in Q1 2010.
Indeed, the four largest publicly held MSOs in the States — Comcast, Time Warner Cable, Charter Communications and Cablevision Systems — collectively lost 208,000 video subscribers in Q1 2013, exactly double the 104,000 they dropped in the year-earlier period.
“With housing starts improving year over year, we expect these results to stoke fears of cord-cutting and losses to over-the-top (services),” Nomura Securities analyst Michael McCormack wrote in a research note.
Telcos AT&T and Verizon held their ground in the first quarter, adding 232,000 and 169,000 TV subs, respectively. But satcasters DirecTV and Dish Network were off substantially: DirecTV added just 21,000 U.S. subs (versus 81,000 a year ago) and Dish gained 36,000 net TV subscribers (versus 104,000 in Q1 2012).
“The first quarter of the year is generally strong, but one in which price increases are typically instituted, resulting in churn and marketing opportunities,” ISI Media analysts Vijay Jayant, David Joyce and Vikash Harlalka noted in a research note.
Cable operators, though, continued to beat telephone companies on Internet and phone services. The four top public MSOs accounted for about 77% of broadband subscriber additions in the first quarter, and added a net 260,000 voice subs as AT&T and Verizon shed 1 million phone line connections.