Almost a Million People Cut the Premium TV Cord in Last Quarter

Losses in the pay-TV industry hit a record high of 812,000 in the April-June quarter, with the number of cord-nevers steadily increasing as well

Last Updated: August 30, 2016 @ 6:26 AM

Another quarter, another not-insignificant loss for the pay-TV market. All told, 812,000 pay TV subscribers cut the cord from April through June of this year, according to research firm SNL Kagan. That’s up from the industry’s loss of 625,000 in the same quarter a year ago.

It’s worth noting that the second quarter of the year, that April through June period, is typically the worst of the year for pay TV companies, as people take stock of their finances and realize maybe spending more time outdoors and less time in front of the TV screen is a good idea. (The first and last three months of the year generally see the most new subscribers.)

The biggest losers in the pay TV space are telecommunications companies: Verizon and AT&T, specifically.

AT&T, which purchased satellite provider DirecTV last summer for $47.1 billion, is actively encouraging subscribers to its U-verse TV service to switch to DirecTV. Those efforts appear to be working, as U-verse had already lost nearly 1 million subscribers in 2015.

Not all of those subscribers have moved over to DirecTV, but enough did that the satellite provider saw an increase of 342,000 customers. (AT&T as a whole suffered a loss of 49,000.) Yet the satellite sector as a whole lost 26,000 TV customers, thanks to record losses at Dish Network (281,000).

Of course, that means 33.3 million people still get their TV from a satellite company.

Their losses have generally been cable’s gain — cable companies like Comcast saw more growth in the second quarter than they have in years, and are continuing to see slowing losses.

Some of this is, admittedly, a little accounting trickery. “Skinny” bundles that may just include local channels, but that subscribers are paying a fee for, count towards the TV subscriber totals at most of these companies. The argument for including these customers, insiders say, is that they are technically paying for TV.

A larger problem than cord-cutters looms: These losses come even as the number of households forming is starting to grow, meaning more cord-nevers.

However, if you’re a company that offers internet service, you’re not in as bad shape as laypeople might think. There are independent companies in the wings promising lightning-fast wireless internet, like Starry, the latest venture from Aereo founder Chet Kanojia. But as of now, most people get their internet from one of the traditional cable companies like Comcast or Verizon.

And TV distributed over the internet is about to experience an explosion. Most traditional providers have internet TV (IPTV) packages in the works, if not already on offer.

AT&T will launch DirecTV Now toward the end of 2016. Comcast’s Stream package will expand beyond the three markets it’s in at the end of the year. Dish Network’s Sling TV product, which delivers a live TV package via the internet for a base price of $20 a month, has hit 764,000 subscribers, per SNL Kagan’s estimates.

Whether these cord-nevers will bite on IPTV remains to be seen, but big pay TV companies aren’t exactly sitting idly by.

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