Pay Television Continues to Rearrange Deck Chairs in Q3

dkreichen1968

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The top eight publically traded pay television companies showed a small gain in the third quarter of 2013. These numbers don’t include top ten companies Cox and Bright House, which are privately held companies, and therefore not subject to SEC reporting requirements.

The top eight gained a total of 75,000 customers, but given that cable was the big loser in the quarter, Cox and Bright House may have easily made for a net loss for the industry as a whole. It should also be noted that recent newcomer, number three telecom, CenturyLink, gained 17,000 video customers, presumably gained at the expense of other providers.

As mentioned above, cable was the big loser for the quarter. The top four cable companies lost a total of 499,000 video customers, and unlike past quarters, where cable companies could count on increases in internet subscribers, both Time Warner Cable and Cablevision Systems lost internet customers. Time Warner Cable’s losses can be partially attributed to their third quarter conflict with CBS over carriage of CBS owned and operated television stations. They lost a total of 306,000 video customers and 24,000 internet customers. Cablevision, who lost 13,000 internet customers as well as 37,000 video customers, has to compete against Verizon FiOS in much of its service area.

Telecoms continued their winning ways. AT&T U-verse and Verizon FiOS accounted for a gain of 400,000 video subscribers. The two also added 828,000 internet customers, making them the big winners in the high speed internet market also.

The Direct Broadcast Satellite providers both logged up quarters. DirecTV added 139,000 video subscribers, presumably driven by the fact that DirecTV is the exclusive provider of NFL Sunday Ticket. Dish Network was also able to add 35,000 video customers. Overall the DBS sector is up 69,000 video subscribers for the year.

Despite the losses by Time Warner Cable and Cablevision internet continued to be a strong growth product. The top six wire line operators added 1,174,000 internet customers. When you include gains by Dish Network (75,000) and CenturyLink (33,000) the industry gained a minimum of 1,282,000 internet customers.

It should be noted that historically the third quarter has been a strong growth quarter for the multichannel video industry as people traditionally sign up for sports packages, and as students go back to college. The relatively small gains show, both that the market is saturated, and that competition from free over the air digital television and internet video continues to place pressure on the industry. Going forward, I’m expecting the industry to continue to stagnate while customers continue to shift from legacy providers toward telecoms, and as internet streaming and free digital television become more mainstream.
 
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