US cable ‘in denial on cord cutting’

According to SNL Kagan’s analysis the US multichannel segment fell by 119,000 customers in the third quarter of 2010, compared to a 346,000 gain reported in third-quarter 2009. US cable operators lost 741,000 basic video customers in third-quarter 2010, marking the single largest quarterly dip for cable since Kagan began compiling data for the segment in 1980. Cable MSO’s share of combined video subscribers continues to slide, dropping to 60.3 per cent, versus 62.9 per cent in third-quarter 2009.

“Operators are pointing to a continuation of the forces that pushed subscriber gains into negative territory in the second quarter, including the weak economy, high unemployment and elevated churn of former over-the-air households,” said Ian Olgeirson, senior analyst at SNL Kagan. “However, it is becoming increasingly difficult to dismiss the impact of over-the-top substitution on video subscriber performance, particularly after seeing declines during the period of the year that tends to produce the largest subscriber gains due to seasonal shifts back to television viewing and subscription packages.”

Despite the overall weakening in multichannel subscription trends, the telco TV industry remains on a growth trajectory, adding 476,000 customers in the third quarter. Although still a modest 6.4 per cent, telco market share is steadily rising, up from 4.7 per cent in third-quarter 2009. The DBS industry, which added 145,000 subscribers in the third quarter, is expanding its market share slightly, up less than 1 per cent over the past year to 33.2 per cent.

The third-quarter multichannel market drop-off marks the second consecutive quarter of video subscriber declines. The multichannel market declined for the first time in history when it lost 216,000 customers in the second quarter of 2010. In the past two quarters combined, the segment has fallen 2.3 per cent to just more than 100 million subscriptions, not eliminating overlap of duplicate subscriptions.

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