Our Analysts

Q2: Broadband’s value in protecting video

By Matt Stump, Aug 9, 2011

The pay TV industry—cable, DBS and telco---is on course to lose more subscribers in second quarter 2011 than it did in second quarter 2010, due to weakness in a surprising sector.

By our estimates, the pay TV industry lost 126,000 subscribers in Q2 ’10. Cable lost roughly 590,000 subscribers, while AT&T and Verizon gained 383,000 subscribers and DBS picked up 81,000.

Fast forward to Q2 2011, and the telcos gained 386,000, up 3,000, and the cable MSOs are on pace to lose the same amount, at 590,000. The biggest change, however, came from DBS, where DirecTV gains fell from 100,000 to 26,000, and Dish, which posted a loss of 135,000 subscribers in Q2 ’11, versus a loss of 19,000 last year. That means DBS lost 109,000 subscribers in the quarter, the first such loss in DBS history, which will put pay TV losses in Q2 ’11 at 325,000.

Year to date, the pay TV industry is up roughly 140,000 subscribers, but more suspect quarters lie ahead.

In the last half of 2010, the industry managed a gain of 12,000 subscribers. If the economy stays the way it is, pay TV additions could go negative in the second half of 2011 to the point where it wouldn’t be surprising to see pay TV growth at a standstill in 2011.

That means the debate between cord cutting and economic hardship will continue. Either way, the video bucket has more holes these days than most media companies would like to see.