The second quarter of 2014 has turned out to be a mixed for the U.S. pay-TV industry which has managed to consolidate its position despite stiff competition from online video streaming service providers.
Although the industry continues to witness significant video subscriber losses, the rate of customer churn has narrowed down considerably, translating into the best second quarter performance in the last six years.
Overall, the pay-TV industry lost 305,000 video subscribers in the second quarter of 2014 compared with 387,000 in the year-ago quarter. Within the industry, cable TV operators lost 517,000 video customers against a loss of 607,000 customers in the prior-year quarter.
Satellite TV providers lost a combined 78,000 subscribers against 162,000 in the year-earlier quarter. Notably, the fiber-based video services offerings of telecom operators registered a total gain of 290,000 video subscribers. However, this figure fell measurably compared with a gain of 373,000 customers in the year-ago quarter.
Over the last six years, the internal dynamics of the pay-TV market have been gradually shifting from cable TV offerings toward fiber-based video services of large telecom operators. Moreover, the strong presence of online video streaming providers is posing significant threat to the existing pay-TV business model.
Video offering, the core business area of the cable TV operators, seems to be slipping out of their hands. At this juncture, a relatively better performance by the cable-TV industry bodes well for the future.
Meanwhile, the U.S. pay-TV industry is currently witnessing massive consolidation. In Feb 2014, Comcast Corp. (CMCSA - Analyst Report) reached an agreement with Time Warner Cable Inc. to acquire the latter in an all-stock deal valued at around $45.2 billion.
In May 2014, DIRECTV reached a definitive agreement with AT&T Inc. (T - Analyst Report) to sell its business to the latter for $48.5 billion. Both deals are expected to close within a year from the date of their announcement. However, the deals are expected to face tough scrutiny and close monitoring by regulator, Federal Communications Commission (FCC).