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08.12.2013
Originally featured on BroadcastEngineering.com
Rate of 'cord cutting' quickens
When cord cutting was first noted after the financial crisis of 2008, pay TV executives blamed it on the bust in the housing markets. That excuse no longer holds true.

The number of Americans cutting the cord to turn off pay TV services is accelerating as the cost of cable and satellite TV subscriptions continues to rise. Reports say the pay television industry lost 316,000 subscribers for the 12-month period ending in June.

“Cord cutting used to be an urban myth. It isn’t anymore,” wrote Craig Moffett of Moffett Research in a research report last week. “No, the numbers aren’t huge, but they are statistically significant.”

When cord cutting was first noted after the financial crisis of 2008, pay TV executives blamed it on the bust in the housing markets. That excuse no longer holds true.

“New household formation has shown at least tentative signs of recovery. Pay TV subscribership has not,” Moffett noted.

For the second quarter of this year, publicly traded pay TV companies have recorded a combined video subscriber decline of 380,000. While that number is about the same as 2012, Moffett said the housing market is now stronger than a year ago, while the change in pay TV penetration is worse.

Recent figures from pay operators shows that video subscriptions declined by a cumulative 316,000, or about 0.3 percent, over the past year through the end of June, compared to a gain of 330,000, or 0.3 percent, for the year before that, Moffett said.

Seasonally, subscribers have tended to always fall in the second quarter as colleges shut down for the summer and "snowbirds" head north. So, Moffett also looked at pay TV subscriber trends for the past 12 months.

DirecTV and Dish, the satellite TV operators, had larger declines than in the same quarter last year. Cable operators lost 591,000 total subscribers in the second quarter, less than the 606,000 drop recorded in the period last year. Comcast and Time Warner Cable suffered the greatest losses.

Both cable and satellite TV operators say they are now attempting to boost revenue from deeper-pocket subscribers who spend the most for TV services. Most seem to be willing sacrifice bargain-hunting cord cutters moving to Internet. How long that strategy can last is unpredictable.



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