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
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
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. (
) reached an agreement with Time Warner Cable Inc. (
) to acquire the latter in an all-stock deal valued at around $45.2
In May 2014, DIRECTV (
) reached a definitive agreement with AT&T Inc. (
) 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
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