Pay TV lags recovery in the economy

  • Last Updated: 10:03 AM, March 21, 2013
  • Posted: 12:32 AM, March 21, 2013

The cable-TV business is not keeping pace with the broader economic recovery, a newly released report shows.

While the housing market added half a million new units in the fourth quarter, pay-TV providers — including cable, satellite and telecom companies — added just 51,000 customers in the same period, according to research firm SNL Kagan.

What’s more, pay-TV actually lost a total of 5,000 users in the other three quarters, meaning it added a measly 46,000 customers last year, for a combined total of 100.4 million subscribers.

“The modest fourth-quarter and full-year 2012 subscriber growth suggests the segment is not rebounding with the broader economy, and customer formation is lagging the rebounding housing market,” SNL Kagan said.

Frank Ockenfels/AMC

A soft economy and new digital delivery systems have cut pay-TV’s penetration into US households over the last 11 quarters, to 84.7% from 87.3%. This could mean more fans are streaming hit shows like AMC’s ‘Mad Men.”

“Relative to population growth, if accurate, an estimate like this one is troubling, and speaks to the need for change in traditional TV, and also of the effectiveness of new online video alternatives,” said Jimmy Schaeffler, head of research firm the Carmel Group.

The report supports the notion that as people move into new homes, they’re doing so without cable service. The percentage of “occupied homes” with pay-TV service fell, dropping to 84.7 percent last year from the peak of 87.3 percent in 2010.

The data jibe with Nielsen figures showing the number of TV households fell for the second straight year.

The smaller pool of viewers appears to be affecting TV ratings — along with other factors such as delayed viewing and viewing on mobile devices. In the season to date, broadcast networks have recorded losses in the all-important 18-49-year-old demographic.

The Kagan report also delivered a big blow for cable operators, which collectively lost 1.66 million video customers last year, on top of the 1.8 million lost in 2011.

Kagan attributed the cable industry’s woes to “high unemployment,” and widespread disruption related to Superstorm Sandy.

Meanwhile, telecom companies that provide programming packages, including Verizon FiOS and AT&T’s U-verse, gained 1.4 million new customers, although that’s less than the 1.6 million added in 2011.

Satellite-TV companies added 288,000, Kagan reported, less than the almost half million added in the prior year.

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