Peter Kafka

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The Truth About Pay TV: It’s Still Not Shrinking

Reuters says more than 400,000 Americans have dropped pay TV this year. So maybe cord-cutting is real, after all.

But if it is, the numbers don’t show it.

It’s easy to be confused about this stuff, but it’s also easy to clear it up: If you want to evaluate the state of the pay-TV business, you have to include the results from the telco guys, who have been taking share from the cable and satellite guys. And you have to look at numbers for the whole year, not a single quarter.

Once you do that, you end up with numbers that are basically flat, give or take a few thousand subscribers.

Here’s the data from the Reuters story, which uses publicly disclosed numbers from the country’s biggest pay-TV providers, who have been reporting second-quarter earnings over the last few days.

Q2 Video subscriber losses:
DirecTV: 52,000
Time Warner Cable: 169,000
Comcast: 176,000
Dish: 10,000
Total: 407,000 lost subscribers

Those numbers will likely get worse once we see results from Charter and Cablevision, who report next week. And there are still a bunch of small cable companies that aren’t public, so sussing out those numbers involves some guesswork. For argument’s sake, let’s say those companies followed the trendline of the last few years, and ended up collectively losing another 300,000 subs.

Estimated total: 700,000 lost subscribers

And now, add back in the 275,000 pay-TV subs Verizon and AT&T picked up last quarter:
Estimated net loss: 425,000


Still, that’s a loss, right? Yes. But as the Reuters piece itself notes, the second quarter of the year is always the worst for the pay-TV guys. College kids move away, people move into new homes, etc.

Last year, for instance, the pay-TV guys lost 442,000 subscribers in Q2. But they still ended up adding more than 200,000 subscribers by the end of 2011. That’s barely any growth at all — something like 0.2 percent — but it’s better than a loss.

This year’s trends look similar. Pay TV added 422,000 subscribers in Q1 — which means they’re basically flat for the year. If recent patterns hold, they’ll have another flat or down quarter in Q3, and then add more again in Q4.

You can argue that the pay-TV industry’s no-growth or barely-there growth is due to a weak economy and lousy household formation numbers. Or you can argue that it’s because people really are swapping out pay TV for Netflix, Apple TV, etc. Or a mix of both, or whatever.

But for now, at least, you can’t argue that the pay-TV industry is shrinking.

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Another gadget you don’t really need. Will not work once you get it home. New model out in 4 weeks. Battery life is too short to be of any use.

— From the fact sheet for a fake product entitled Useless Plasticbox 1.2 (an actual empty plastic box) placed in L.A.-area Best Buy stores by an artist called Plastic Jesus