The migration of television from its current bundled paradigm to its a la carte, internet-delivered future may be further away than some cord cutters would like. But based on second-quarter earnings data released by the top four pay TV services, the multi-channel video business as we know it no longer seems to be in growth mode.
On Thursday, DirecTV reported its first net subscriber loss for a quarter, with a net 52,000 U.S. customers bolting the satellite service during the period extending from April 1 to June 30.
In fact, each of the top four multi-channel video providers — which collectively service more than 60 percent of U.S. pay TV homes — lost customers in the second quarter. Earlier on Thursday, No. 4 service, Time Warner Cable announced a net loss of 169,000 subscribers. That came just a day after No. 1 service, Comcast, reported a net loss of 176,000 cable customers.
Last week, in a pre-Q2-earnings filing with the Securities Exchange Commission, satellite carrier Dish Network, the No. 3 service, revealed a net second-quarter loss of 10,000 users. Collective total for the Big Four: minus 407,000 users.
Coupled with satellite additions, the emergence of these two telco video services have more than offset the declines of the cable business and kept the overall pay TV business in growth mode the last few years. But at least for now, satellite has stopped growing.
As for DirecTV, the loss of 52,000 net U.S. subscribers wasn’t a complete surprise, with analysts predicting a loss in the mid-30,000 range due to the company’s efforts to reduce “churn” and keep subscribers around for the long haul, instead of enticing them for short stays with short-term promotions.
DirecTV reported a 9 percent increase in quarterly revenue to $7.22 billion. It’s operating income before depreciation and amortization (OIBDA) — i.e. profit – also increased 9 percent to 2.01 billion. While the satellite company faces stagnant growth domestically, it continues to show ample promise in Latin America, where it added another 645,000 net subscribers.
And while Latin American expansion continues to be the key to DirecTV’s future, cable companies like Time Warner are banking on the growth of broadband users. The addition of 72,000 net ISP customers pushed Time Warner’s revenue up 9.3 percent to $5.4 billion in Q2. OIBDA increased 10.3 percent to $2 billion.