A new report by MoffettNathanson found that the pay-TV industry lost 113,000… (Jonathan Fickies / Bloomberg )
For cable-TV operators, 2013 has been a tough year.
This year will probably be the worst for the pay-TV industry in terms of customer retention, according to a report Tuesday by independent research firm MoffettNathanson.
Veteran Wall Street media analysts Craig Moffett and Michael Nathanson calculated that the pay-TV industry — which includes cable, satellite and phone companies offering video service -- lost 113,000 subscribers during the third quarter.
Cable operators lost 687,000 subscribers in the period, according to their estimates. That was a far steeper decline than the year-ago period. And though the satellite TV and telephone companies picked up about 574,000 subscribers, it wasn't enough to erase the net loss for the industry.
"The pay-TV industry has reported its worst 12-month stretch ever," Moffett and Nathanson wrote.
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Having a particularly hard time was Time Warner Cable, which lost more than 300,000 subscribers in the third quarter as its high-profile skirmish with CBS Corp. over programming fees and digital rights played out. Local CBS stations were blacked out for a month in Los Angeles, New York and Dallas.
Still, the analysts noted that the pace of cord-cutting slowed during the quarter.
They attributed much of the decline to the sluggish housing market and a dearth of new household formation (which has long been the key driver for increased TV subscriptions).
Because of the losses suffered by cable operators, it would seem that the U.S. wireless business would generate higher revenue growth than the pay-TV industry, Moffett and Nathanson theorized.
But not so.
They calculated that revenue growth for the wireless industry is below 3%, while the pay-TV industry's revenue growth is a healthy 5.1%.
"Of course, the fact that pay-TV revenue is still rising smartly is part of the problem," Moffett and Nathanson wrote. "We have always argued that cord-cutting is an economic phenomenon, not a technological one. ... Pay-TV revenue growth reflects rapid pay-TV pricing growth and that is precisely the problem. Rapidly rising prices are squeezing lower-income consumers out of the ecosystem."
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