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Cable MSOs Losing Pay-TV Ground - Analyst Blog

Posted: 8/20/2013 6:24:00 PM
Referenced Stocks: CMCSA;DISH;DTV;SMB;T

A recent analysis by Leichtman Research Group Inc. revealed that the cable TV operators in the U.S. are gradually losing their hold in the pay-TV market. Internal dynamics of the pay-TV market is slowly shifting toward fiber-based video offerings of large telecom operators. Video offering is the core business area of the cable TV operators, which is slipping out of their hands.

Litchman stated that 9 large cable TV operators including Comcast Corp. ( CMCSA ) and Time Warner Cable Inc. ( TWC ) together lost a whopping 555,000 video subscribers in the second quarter of 2013, up 2.8% year over year. Satellite TV operators, DIRECTV ( DTV ) and DISH Network ( DISH ) together totaled a loss of 162,000 subscribers in the same quarter. Whereas, telecom giants Verizon Communications Inc. ( VZ ) and AT&T Inc. ( T ) jointly gained 373,000 subscribers, up an enormous 35.6% year over year.

Cable MSOs currently hold less than 54% of the total U.S. pay-TV market share, while satellite TV operators hold less than 36% and telecom operators hold close to 11% market share. Litchman further stated that 13 large cable TV, satellite TV and telecom pay-TV operators collectively lost 344,000 video subscribers in the second quarter of 2013, up 5.9% year over year.

In order to counter the loss of video offerings to telecom operators, the cable MSOs have decided to focus on the small and medium sized business (SMB) segment, which is one of the core areas of telecom operators. Various industry researches estimate that the SMB segment is expected to offer a $20 billion to $30 billion market opportunity.

Significant growth in business data and video traffic resulted in an unexpected future growth catalyst. Furthermore, managing wireless backhaul traffic for the mobile towers also opened up a multi-billion dollar market. Cable operators are now gradually offering innovative wireless broadband services to their business customers in order to maintain this momentum.

COMCAST CORP A (CMCSA): Free Stock Analysis Report

DISH NETWORK CP (DISH): Free Stock Analysis Report

DIRECTV (DTV): Free Stock Analysis Report

AT&T INC (T): Free Stock Analysis Report

TIME WARNER CAB (TWC): Free Stock Analysis Report

VERIZON COMM (VZ): Free Stock Analysis Report

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