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Pace Of Cord-Cutting Growth Slows in Q3: Analyst

The Bad News: U.S. Pay-TV Still Dropped 113,000 Subs In The Period 11/12/2013 12:15 PM Eastern

The U.S. pay-TV industry took it on the chin in the third quarter, but the punch was pulled somewhat by the fact that the pace of cord-cutting evidently slowed.

That’s according to the analysis of MoffettNathanson Research partner and senior analyst Craig Moffett wrote, who issued a note on the matter soon after Dish Network posted surprisingly strong third quarter results.

The U.S. pay –TV industry shed 113,000 subscribers in the period, leaving year-over-year growth at -0.2%, matched with the year-ago rate of contraction.

“Hallelujah. Score one for the upstarts,” Moffett wrote. “Despite the modest worsening of subscriber loses in Q3, it appears that the pace of cord cutting actually slowed in the quarter.”

This comes after the pay-TV industry lost 380,000 subs in the typically weak second quarter. In his second quarter analysis of pay TV results in August,  Moffett estimated that 911,000 U.S. homes had cut the cord over the previous 12-month period, leading him to surmise that the cord-cutting is no longer an “urban myth.”

And the third quarter results could’ve been worse. Moffett pointed to U.S. Census data showing that there were 366,000 fewer new occupied dwelling units in the third quarter versus the year-ago period. “With less of a tailwind from household formation, Pay TV subscribership predictably suffered…What is perhaps more interesting is the fact that Pay TV declined is that it didn’t decline more than it did.”

During the third quarter, the telcos and satellite TV operators fared well, while cable struggled.

According to Moffett, the telcos grabbed 400,000 TV subs in the period, versus 317,000 last year, while Dish Network and DirecTV nabbed 174,000, well above the 48,000 subs gained a year earlier. Cable, hit particularly hard by the Time Warner Cable/CBS dispute, shed 687,000, versus 466,000 in the year-ago quarter, making it the worst quarterly result since the second quarter of 2011.

U.S. cable’s declining TV sub base also caused losses to accelerate on a percentage basis--  -3.4% compared to -2.6% a year ago, Moffett wrote.

September