Cord-Cutting Alert: Pay-TV Biz Declines for First Time

The U.S. pay-TV business keeps shrinking, albeit slowly — but for the first time ever, the sector dropped a net number of subscribers in the first three months of a year, during Q1 of 2015.

Variety reports the industry is contracting at a 0.5% annual rate, with a net loss of 31,000 customers in Q1, according to MoffettNathanson analyst Craig Moffett. Traditional subscription television providers face an array of Internet competitors, ranging from Netflix and Hulu to YouTube and other digital-video sites, that are discouraging consumers from signing up for cable or satellite TV or prompting them to cancel service.

“Cord-cutting has finally accelerated,” Moffett wrote in a research note Monday. “It’s not too early to get worried.”

Craig Moffett

Q1 is typically a strong quarter for pay-TV operators, but it’s seasonally weak for household formation, Moffett noted: In the first quarter of 2015, occupied household net adds were down 407,000, according to the U.S. Census Bureau.

The decline in Q1 2015 comes after about 1.4 million households over the course of 2014 either canceled existing pay-TV service or were new households that didn’t sign up at all, according to Moffett’s analysis.

Comcast, the No. 1 cable operator, shed 8,000 video subscribers, while Time Warner Cable — the now-aborted takeover target of Comcast — actually gained a net 33,000. DirecTV, the largest satellite provider, added 60,000 and Verizon FiOS and AT&T U-verse added subs as well. But overall, the gains were offset by customers dropping service with other companies.

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