After years of steady declines, cord-cutting by subscribers to MVPDs may finally be flattening while viewing on free streaming services is on the rise, according to a new study from Horowitz Research.

More than half (52%) of the 2,200 adults surveyed in Horowitz’s State of Media, Entertainment and Tech: Subscriptions 2023 study said they subscribe to multichannel video programming distributors (MVPDs), matching last year’s survey percentage. Further, 80% of MVPD subscribers rate their satisfaction with their pay TV provider at 80%, slightly up from last year, according to the researcher. 

Also, 32% of cord-cutters say that they might return to cable if the cost of streaming services continue to increase. Consumers report spending more than $50 per month on subscription streaming services, with only 33% of cord-cutters reporting that they were saving “a really good amount” compared to the traditional MVPD bundle. Increasingly consumers are looking for managed services to help control costs, according to Horowitz. 

“Managed services — in which subscribers can see and manage all their streaming content in one place — would be an antidote to the challenges inherent to today’s highly fragmented streaming space, and consumers seem open to consolidating their services together,” Horowitz Research chief revenue officer and insights & strategy lead Adriana Waterston said. “It’s a matter of which companies will compete to be the managed services solution from the streaming age, between traditional MVPD’s and tech companies like Amazon, Samsung, Roku and Apple.” 

Meanwhile, consumers are spending more time accessing free ad-supported streaming TV [FAST] services. Nearly 70% of viewers use free streaming services like Pluto TV, Tubi, Peacock and YouTube at least monthly, up from 42% in 2019, according to the survey. 

“The adoption of AVOD/FAST services — and the concomitant increase in streaming ad revenue we can expect to see — will help offset revenue loss on the linear side, which is critical as programming costs continue to skyrocket,” Waterston said.

The survey was conducted in January and February of 2023, Horowitz said.

The Black TV audience, once reliable cable and satellite subscribers, are increasingly cutting the cord in a world of proliferating streaming options.

A new Horowitz Research study found that multichannel video programming distributor (MVPD) penetration among Black households has declined about 30% in just the past four years, from 88% in 2017 to only 61% in 2021.

The study found that 60% of Black audiences watch content specifically geared to them at least weekly, suggesting that there is an opportunity for streamers that can provide content that “reflects contemporary Black perspectives and culture,“ combined with ”robust on-demand offerings.“

The study found that four in 10 Black consumers rely on a combination of streaming services, digital antennas for over-the-air broadcast (the study found that Black audiences still value local broadcast news, for example), and and/or virtual vMVPDs for video content, with only one in four relying on MVPD service and no streaming.

But Horowitz said video providers — traditional and over-the-top — have work to do to court that audience, work that goes beyond just building it and expecting them to come.

“Many companies are late to the game, only now focusing on the Black audience in the context of BLM [Black Lives Matter] and new diversity mandates,“ Horowitz chief revenue officer Adriana Waterston said. “To not be viewed as simply pandering, companies who hope to serve the Black audience must make meaningful and sustained investments, not just in programming and marketing, but in community outreach and support, in order to earn this valuable audience’s trust.“

The FCC has voted on a Report and Order (R&O) that would speed up the program access, program carriage, and retransmission consent complaint resolution process.

That came at its virtual November public meeting Wednesday (Nov. 18). The vote was unanimous.

There is currently a one-year statute of limitations, but it allows for a programming vendor to file a program carriage complaint against an MVPD at any time, including years later, with the one-year statute of limitations triggered when the vendor notifies the MVPD of the complaint. That essentially defeats the purpose of a statue of limitations, the FCC said Wednesday.

The R&O clarifies that the one-year limit is triggered "when an MVPD rejects or fails to acknowledge a request for program carriage or request to negotiate for program carriage."

It also modifies the effective dates for carriage decisions by the FCC's Administrative Law Judge to square them with timelines for other ALJ decisions and standardizes rules for resolving complaints against program carriage, program access, retransmission consent, and open video systems (OVS). Specifically, it means that an ALJ's initial decisions on those complaints won't take effect "for at least 50 days following release and will be stayed automatically upon the filing of exceptions with the Commission."

It sets an "aspirational" 180-day shot clock, similar to the one on merger reviews, for the FCC's review of an initial ALJ decision. ALJ decisions are not dispositive, but are instead advisories to the commission on how the judge would recommend it rule. The 180-day clock starts when an appeal of those decisions are filed by an aggrieved party.

And, in a bit of housekeeping, it eliminates a now-moot program carriage standstill provision--it was vacated by a federal appeals court back in 2013.

Commissioner Michael O'Rielly, who pointed out he took the lead on the item, said that there was much more work to do on media modernization and hoped future commissions would take up that effort.

Commissioner Jessica Rosenworcel said she supported "ironing out the wrinkles" in the rules, but needed to monitor it to make sure it also helped independent programmers.

“We applaud the FCC for adopting commonsense reforms to its program carriage and other complaint procedures," said NCTA-the Internet & Television Association. "This latest action in the Commission’s media modernization proceeding is yet another welcome step forward in adapting the Commission’s rules to today’s competitive marketplace.”  

The FCC is proposing to adjust its relocation costs for the C-Band repack to reflect the additional costs MVPDs incur from needed technology upgrades. 

 Related: FCC Seeks Comment on C-Band Exit Costs 

The commission is seeking input on that and other aspects of the lump sum payments to earth station operators in the C-Band as the FCC relocates those users to the upper 200 MHz of the band to free up the lower 300 MHz for wireless broadband. 

The FCC is planning to auction 280 of that 300 MHZ (the other 20 is for a guard band) by the end of the year. 

Related: FCC's C-Band Auction still a 'Go' for December 

The FCC is allowing for lump sums to various earth station owners, rather than having to calculate actual costs. 

After issuing its initial Cost Catalog public notice it got plenty of comments, including estimates for lump sum payments for categories of equipment, methodologies for coming up with the payments, and the proposal for a separate category for MVPD earth stations and the additional costs to be factored in. 

Related: Pai Defends C-Band Incentive Payments to Hill 

Those added MVPD costs include integrated receiver/decoder (IRD) replacements. 

The FCC's Wireless Telecommunications Bureau says it has considered those comments, and in response updated the classes of earth stations to include the separate MVPD class, and has come up with proposed lump sums for earch class. Now it wants comment on those classes and payments as well as on the methodology for coming up with average estimated costs.  

Of the adjusted MVPD category, the bureau said: 

"We propose a modified list of earth station classes to more accurately reflect the types of earth stations currently operating in the contiguous United States and to account for the additional costs that MVPD earth station operators may incur during the transition. To determine the relevant lump sum amount, the threshold question is whether an earth station is used for MVPD or non-MVPD operations. Non-MVPD earth station operators would be eligible to receive the base amounts for the relevant class of earth station(s) they operate (e.g., receive only single-feed; receive only multi-feed, small multi-beam, etc.). MVPD earth station operators would be eligible to receive the relevant base amount, as well as the amount associated with any relevant technology upgrades."

Broadcasters took aim Thursday at MVPDs' argument that TV stations have too much bargaining power in retransmission consent negotiations and that the FCC should apply ownership limits to their multicast streams and to LPTV stations. 

The National Association of Broadcasters was responding in reply comments to the FCC's request for input on its upcoming Communications Marketplace Report to Congress on the state of media competition. 

Related: ATVA to FCC: Retrans is Marketplace Competition Problem 

As to MVPDs' comments? NAB said essentially, "nothing to see here." 

"[T]he predictable and unmeritorious complaints of the multichannel video programming distributor (MVPD) parties about retransmission consent – complaints that have not improved with age and repetition – do little to inform the FCC’s inquiries here and have no bearing on the need to reform the local TV ownership rule," NAB said.  

Related: FCC Seeks Comment on Competition 

NAB reiterated some points that it said it has made countless times: "MVPDs’ unhappiness about paying retransmission consent fees does not mean that TV broadcasters have any undue bargaining power over MVPDs; that those fees are, in any economic sense, too high; or that changes to FCC rules intended to enhance large pay-TV/broadband companies’ position at the negotiating table are in any way justified." 

Related: NAB to FCC: COVID-19 Challenges Emphasize Need for Dereg 

The FCC report is not expected to offer any policy recommendations, instead providing an overview of the state of competition. But NAB suggests the inescapable takeaway from that view is that broadcasters face plenty of competition from unregulated competitors and they need room to maneuver, which means fewer ownership regs.

The FCC will vote this month on its latest deregulatory proposal under FCC chair Ajit Pai's Modernization of Media Regulation initiative, according to Pai.

This one will replace some MVPD--cable and satellite--paper notifications to TV stations with electronic ones.

Currently, cable operators must give notice on paper when they begin service in a market or reposition or delete a broadcast channel and satellite operators have to kill a tree or two to notify about launching service or retransmitting some stations.

In blogging about the agenda for the upcoming Jan. 30 meeting, Pai said it was another effort to match the rules to marketplace realities, and pointed out that there was unanimous support for it in comments following the July vote to propose the change.

The July 10 vote on the proposal was also unanimous.

The FCC has voted unanimously to propose eliminating the requirement that cable operators provide their subs at least 30 days notice of a TV station channel coming off their systems, changing it to notice "as soon as possible" given that retrans deals are often struck in the 11th hour.

It must still collect comment on the proposal and vote on a final order, but that will almost certainly happen.

Under the FCC's current rules cable ops have to provide that 30-day notice before a channel comes off if that change "is within the provider's control."

The problem is that most disputes wind up being resolved in that 30-day window, so the notifications wind up being for takedowns that never happen. "[W]e don't want consumers to be inundated by premature and inaccurate notices about channel changes that never come to pass," FCC chair Ajit Pai said last month in announcing the vote.

The item also seeks comment on whether "to require that notice of rate or service
changes—regardless of whether those changes are due to failed carriage negotiations be
provided by cable operators to LFAs (Local Franchising Authorities) only if required by an LFA."

"To be truly meaningful, notice must be relevant, timely, and actionable," said commissioner Brendan Carr. "And, most of all, accurate. If our subscriber notice requirements for cable service changes are not providing customers with meaningful information, then the notices may be doing more harm than good."

Commissioner Geoffrey Starks supported the item, but with some reservation.

"I firmly believe that transparency is key and our regulators should communicate early and often with customers about any changes to their rates or service," he said. "This NPRM proposes to amend our statutorily mandated cable consumer protection rules in a way that, I fear, could result in less information being shared with consumers and more unwelcome surprises in the form of blacked out channels and lost service."

But he said that after the chairman agreed to add questions about what consumer harm could stem from noticing a blackout after it had already begun and how notices should be conveyed, among others, he would vote for the item and review the record that develops.

Commissioner Michael O'Rielly called it an important update up the FCC's rules, which has become a monthly ritual. He said the FCC needed to proceed judiciously given that even the slightest change can impact the bargaining power of one side or the other. But he also said there was a need for wholesale reform given the existential threat traditional broadcasters and MVPDs from "virtually unregulated over-the-top and streaming video providers."

Commissioner Jessica Rosenworcel said the purpose behind the 30-day advance notice rule is clear--viewers need notice--but it needs to work in the real world. She said it makes sense to take a fresh look, but also not forget to put consumer interests first. She applauded the removal of tentative conclusions and added questions she asked for, and so she, too, supported the item.

Pai said that most retrans disputes are resolved shortly before such deadlines and the FCC rules "simply don't reflect that reality."

"We commend the FCC's unanimous vote launching this proceeding. Consumers would be ill-served by requiring operators to send confusing and unnecessary notices about potential channel line-up changes, where parties are engaged in active negotiations at the end of a contract term," said NCTA-the Internet & Television Association. As we have seen in the marketplace, the vast majority of such negotiations end successfully without any direct consumer impact. We look forward to working with the FCC to bring this bipartisan proposal to a swift conclusion."

An emerging group of viewers are subscribing to both traditional cable and streaming services in an effort to satisfy their voracious viewing habits, according to a new viewer study from Horowitz Research. 

The Horowitz State of Viewing & Streaming study reports that 15% of viewers -- defined by Horowitz as “Mega Omnivores” -- view content both through a traditional cable subscription as well as through virtual MVPDs such as DirecTV Now, YouTube TV and Sling TV. On a weekly basis, this group -- comprised mostly of younger, male-skewing viewers with high incomes -- streams its content 54% of the time, according to the report.

The online survey of more than 1,600 TV content viewers also reported that traditional television viewers remain the biggest group, with 35% of “5 O’Clock Diners” watching live TV content through traditional MVPDs or through antennas, according to the study. These viewers tend to be older, have a lower average income and are less likely to have children in the home, said Horowitz.

“Omnivores” -- viewers who only subscribe to an MVPD but occasionally stream content through services such as Netflix and Hulu -- comprise 30% of TV content viewers, according to the study.

“With more options than ever for accessing on-demand and live TV content, consumers have the freedom to build a customized viewing experience based on what they want to watch and how they want to watch it,” said Adriana Waterston, Horowitz’s senior vice president of insights and strategy in a statement. “The good news is that we see most consumers still wanting a robust experience that includes a wide variety of networks, viewing experiences, and both on-demand and live opportunities.”

Among the study’s other findings, 12% of TV content viewers (Content Paleos) stream all of their content, but don’t subscribe to a vMVPD; 6% (Flexitarian Lites) stream most of their content but have an antenna to watch live TV; and 3% (Flexitarians) -- who tend to be young and multicultural -- stream all of their content and also subscribe to a vMVPD, according to the report. 

NBCUniversal posted a big increase in profits in the second quarter, as distribution revenue increased at its cable and broadcast TV networks.

Parent company Comcast said NBCU’s adjusted earnings before interest, taxes, depreciation and amortization rose 22.6% to $2.071 billion. Revenue increased by 17.3% to $8.331 billion.

At the NBCU cable networks, earnings rose 11.7% to $1.055 billion as revenue rose $5.1% to $2.7 billion. An 8% gain in distribution revenue offset lower ad revenue, which was down 0.9% because of lower ratings.

NBC’s broadcast operations increased profit by 5.5% to $416 million. Revenue was up 5.3% to $2.241 billion. Distribution and other revenue was up 36.1% because of higher retransmission-consent fees. Advertising revenue was down 1.2%.

Overall, Comcast’s second-quarter net income rose 24% to $2.513 billion, or 52 cents a share, from $2.028 billion, or 41 cents per share, a year ago. Revenue rose 9.8% to $21.165 billion.

At Comcast’s cable business, earnings rose 5.4% to $1.956 billion in the quarter as revenue rose 5.5% to $13.12 billion.

The MSO’s total number of video subscribers fell by 34,000. The company added 175,000 high-speed internet customers. Phone customers were down by 22,000.

Total customer relationships rose by 114,000, the company said.

Read more at broadcastingcable.com.

Layer3 TV, the Colorado-based next-generation cable operator, travels high-speed connections in the local-access network to get video services into customer homes, but the company likewise insists that it’s not an “over-the-top” service like Netflix or a “virtual” MVPD such as PlayStation Vue.

So, if it’s not a traditional multichannel video-programming distributor and it’s not an OTT provider, what is it? A different animal, as it turns out.

“We’re neither fish nor fowl,” Jeff Binder, Layer3 TV’s CEO, explained, when asked about the company’s distribution architecture.

The heart of its platform is powered by products and systems that one would typically find at the headend of a traditional cable operator. Plus, Layer3 TV’s video signals do not traverse the public Internet from their origination point to the local market. But, unlike a traditional cable operator, Layer3 TV doesn’t own and operate the local-access network. Instead, it relies on standard interconnection deals with local service providers, such as MSOs, to handle that piece of it.

INSIDE ‘SUPER HEADEND’

“We control as much of the network as we can,” Binder said. “We don’t see congestion in the last mile.”

For all intents and purposes, Layer3 TV is a facilities-based pay TV operator. And many of those facilities are located in a high-security “super headend” that Layer3 TV operates inside a large data center in the Denver area.

There, Layer3 TV has about 120,000 square feet of space under management where it collects and aggregates its live channels and video-on-demand fare (it’s aiming to offer a VOD library with about 30,000 assets by year-end) and encrypts, encodes and packages that payload before delivering it all to the local areas it serves.

During a recent visit to that headend facility, on display was much of what you’d expect to see in a cable headend. Racks of equipment with blinking lights sit behind locked metal cages, all cloistered within a cool, climate-controlled area.

While Layer3 TV’s transmissions are entering Chicago-area homes on Comcast’s high-speed access network in the early going, the plan is to support multiple ISPs that can provide the necessary data requirements.

Layer3 TV is also working with Altice USA-owned Suddenlink Communications on a trial under the Umio TV brand in two Texas markets. Altice is reportedly one of Layer3 TV’s unannounced investors.

It wouldn’t be a big surprise to see Layer3 TV forge interconnection deals with RCN at some point — RCN and Grande Communications were recently acquired by TPG Capital, which is also an investor in Layer3 TV.

In addition to this new distribution approach, another difference from traditional cable is that Layer3 TV is an all-IP video service. The company doesn’t need to support a legacy system that uses less-efficient MPEG/QAM transport technologies.

It employs adaptive bit rate technologies to deal with fluctuations in available bandwidth, but tailors its video streams for large-screen TVs and ensures they do not dip below HD quality.

To keep bandwidth requirements in check, Layer3 TV also uses High Efficiency Video Coding (HEVC/H.265), an encoding scheme designed to be 50% more efficient than MPEG-4/H.264 while also producing a more stellar image.

The company declined to discuss the bit rates it needs to support its specified minimal image quality, but told Wired earlier this year that it needs about 5 Megabits per second to deliver its HD streams.

Binder said Layer3 TV is also bullish on 4K, and that his company is also ready to support High Dynamic Range (HDR), a format that delivers brighter, more colorful pixels that can be applied to 4K and HD video. Layer3 TV currently offers a 4K channel from NASA, and “will be offering several more” along with access to special events that are produced in the pixel-packed format, Binder said.

For now, Layer3 TV is not supporting a cloud DVR (“We’ll see how that market evolves,” Binder said), but its local whole-home DVR setup has enough space to store up to 2,000 shows and movies and can record up to eight shows at once. Layer3 TV is also beta-testing a mobile app (for access to TV Everywhere content) and expects to launch it “soon,” Binder said.

Notably, Layer3 TV’s Denver-area facility still has lots of open space. Its system is designed to be modular, allowing for the company to add capacity as its subscriber base grows.

Binder estimates that its current facility can support about 10 million subscribers. The company also has plans to build another super headend to serve the Eastern U.S.

But Layer3 TV doesn’t necessarily think it needs to reach its full capacity in order to be successful. “We don’t have to take over the world to be a great company,” Binder said.

Layer3 TV launched service in Chicago last month, but hasn’t identified where it will offer service next. However, the company is seeking installation supervisor positions in Denver, Houston and Washington, D.C. and Binder also told The Denver Post recently that Denver was among the cities on its market launch list.

GOING FULL FREIGHT

Binder also touched on Layer3 TV’s decision to market a full-freight pay TV service.

“The market isn’t devouring skinny bundles,” Binder said. Targeting a part of the market that wants slimmed-down bundles is a “small market opportunity” that’s also exposed to high rates of churn, he added.

And despite the rise of multichannel services like Sling TV and PS Vue, he doesn’t think OTT is a long-term conduit for delivering pay TV packages, but one that is better suited for delivering tailored, more focused fare.

“I think OTT is a temporary phenomenon for mainstream content,” Binder said, predicting that OTT services will essentially represent new “channels” for MVPDs that are already pretty good at bundling TV and video services.

And he’s not fretting too much about usage-based data policies. “Caps are the exception, not the norm,” Binder said.  

WASHINGTON — Online video-streaming company FilmOn X continues to fight for a compulsory license and access to broadcast-TV station signals, arguing it qualifies as a cable system for that purpose.

A compulsory license would allow FilmOn X to deliver TV-station programming from the major networks at the government-set rate, rather than having to negotiate individually with each broadcaster. The issue is whether online video distributors are effectively multichannel video providers (MVPDs) eligible for the statutory license that allows them to avoid negotiating for individual network broadcast content.

That issue is unsettled, with the U.S. Copyright Office saying OTT providers aren’t eligible, but also saying that could change depending on what the courts and the Federal Communications Commission decide.

The FCC is mulling defining some over-the-top distributors as MVPDs and the agency’s chairman, Tom Wheeler, has pointed to the need to prevent “old rules” from hampering online video competitors like FilmOn X. But the FCC has also put that decision on the back burner while the marketplace develops.

FilmOn X has filed a new brief in its challenge to a November 2015 U.S. District Court for the District of Columbia dismissal of its request that the court rule the online TV-station streaming service is a cable service entitled to that compulsory license. The brief adds some new twists, too.

The U.S. District Court for the Central District of California ruled in a separate case that FilmOn X was such a service and qualified for the license, which the broadcast networks challenged. Neither matter has been resolved, so FilmOn X is asking the D.C. court to stay the California court’s decision until the 9th U.S. Circuit Court of Appeals resolves that challenge.

FilmOn had also asked the D.C. court to stay its decision until the California case was resolved, but was unsuccessful. The company has said that court abused its discretion by denying the stay.

“The [U.S.] district court failed to examine the close relationships between the plaintiffs in the two parallel actions, which would have revealed no meaningful differences between them,” FilmOn X said. “The district court then abused its discretion when it refused a stay on the ground it might decide this case ‘slightly differently’ than the California court. The district court reached the opposite conclusion. To alleviate that conflict, this Court should vacate the district court’s order and stay this action pending final resolution of the California Action. In any event, FilmOn X is eligible for a cable-system license.”

U.S. District Judge Rosemary Collyer ruled that FilmOn X, which streamed on-demand and day-and-date video online, was liable for infringing the plaintiffs’ (Fox and other broadcast networks) performance right under the Copyright Act and was not eligible for the compulsory license.

Oral argument has not yet been scheduled in the D.C. appeals court. FilmOn X is represented by Baker Marquart.

The cable universe is shrinking.

Consolidation, competition and new viewing habits are irrevocably changing the pay TV landscape, with more contraction expected as larger deals close and smaller cable systems are snapped up by their larger peers.

But unlike years past, when deals were driven by a desire to cluster operations more efficiently, the coming consolidation wave seems sparked purely by a need to get bigger — bulking up to roll out new services more effectively and cheaply across a broader base, and to help keep rising programming costs in check. Cable operators aren’t the only ones looking for scale. AT&T completed its $48.5 billion acquisition of DirecTV in July, raising its video-subscriber tally to 26.3 million customers and vaulting the telco to the top of the list of multichannel video-programming distributors (MVPDs). Comcast, which abandoned its $67 billion pursuit of Time Warner Cable in April when it determined regulators would not sign off on the deal, is still a solid No. 2 with 22.3 million subscribers.

Charter Communications, which started the whole consolidation wave in 2014 when it began a dogged pursuit of Time Warner Cable, finally won that prize with its May agreement to purchase the 10.8 million-subscriber TWC for $78.7 billion. That deal is expected to close by the end of the year, and with Charter’s $10 billion purchase of Bright House Networks — also expected to close in December — the Stamford, Conn.-based operator will have 17.2 million customers with which to spread the operating acumen of CEO Tom Rutledge.

CATCHING THE WAVE

Charter is expected to at least look at other potential acquisitions, but others are not sitting idly by. European telecom giant Altice agreed to purchase a 70% interest in Suddenlink Communications for $9.1 billion, and has said it will use the midsized St. Louis-based cable company as a vehicle to expand its U.S. presence.

Already, Altice chairman Patrick Drahi has named Cox Communications and Cablevision Systems as potential targets. And though Cox has insisted it isn’t for sale — and there is some doubt as to whether Altice could pay Cablevision’s price — there is no doubt that further consolidation is coming.

In a recent report, MoffettNathanson principal and senior analyst Craig Moffett said possible acquisition targets could include some of the larger operators at the lower end of the top 10 — Mediacom Communications, Cable One or WideOpenWest.

“It would be foolish to dismiss the idea that any or all of them might be acquired,” Moffett wrote.

And the cable industry has a long history of acquisition. For example, only three of the Top 25 MSOs of 1985 still exist today (Cox, Cablevision and Comcast); the rest have been assumed by other entities. Five of the Top 25 of 1995 are in business today — Time Warner Cable, Comcast, Cox, Cablevision and Charter — with TWC expected to be swallowed by Charter by year-end.

Cable operators stopped growing their basic-video subscriber rolls more than a decade ago. The industry peaked at about 66.9 million total subscribers in 2001, and in 2014, it finished the year with a total of about 54 million subscribers, according to the National Cable & Telecommunications Association. Broadband, for years the profit center of the business, emerged as the subscriber leader last year — the first year that cable broadband customers exceeded video subscribers.

While that had been anticipated — and in some cases, encouraged — for years, cable operators are beginning to turn the corner on basic-video subscriber growth. The four top cable service providers have drastically reduced their customer losses over the past three years; Comcast alone has cut losses by nearly 75% since 2010.

Telcos, which had been engines of video-subscriber growth for more than a decade, began reporting losses for the first time in the second quarter. AT&T said it lost about 22,000 U-verse TV customers in the most recent quarter, while Verizon Communications saw its growth cool considerably, adding 26,000 FiOS TV customers in the period compared to 100,000 additions in the prior year.

At the same time, satellite subscriber growth has stalled — DirecTV lost 133,000 net subscribers in the second quarter, well below the 60,000 additions in the first three months of the year. No. 2 satellite company Dish Network lost 81,000 net subscribers in the second quarter, almost twice the 44,000 it lost during the previous year.

Dish Network lost about 79,000 net subscribers in 2014, compared to a gain of 1,000 in 2013.

DISRUPTING THE DISRUPTOR

As satellite- and telco-TV service stagnates, a new distribution model is disrupting TV’s early disruptor — cable operators. Over-the-top services like Sling TV, HBO Now and Sony’s PlayStation Vue have burst onto the scene with much fanfare, and pay TV operators who may have dismissed those services in the past are now scrambling to come up with their own solutions.

In the second quarter, pay TV lost its traditional growth engines — satellite TV was down 284,000 customers while telco TV providers lost 2,000 subscribers — and perennial loss leader cable cut its losses almost in half to 280,000 from 534,000 a year ago.

Indeed, pay TV subscriber growth dipped to a record low of -0.7% in the past 12 months, according to Moffett. The pay TV industry lost 566,000 subscribers in the second quarter, 76% worse than the 321,000 it lost during the same period in 2014.

With more OTT services slated to launch later this year — Verizon is expected to debut its “mobile-only” Go90 service in the late summer and other programmers are considering launching their own direct-to-consumer services — cord-cutting will likely get worse. And cable operators will likely meet the challenge by trying to add scale.

But just how many customers will migrate over remains to be seen. Years of consolidation have narrowed the number of large available properties. While there are about 660 cable operators and 5,208 cable systems in the United States, more than 80% of the nation’s 116 million TV households are represented by the top eight MVPDs.

And unlike other years when an MVPD could buy the operator below it on the list and move up several spots on the list, today the fifth-largest provider (Verizon) could could buy the next three largest distributors below it and still be stuck at No. 5 with 13.7 million customers, behind Dish Network’s 13.9 million subscribers.

To see the current and historic lists of Top 25 MVPDs, please click here.

WASHINGTON — The Federal Communications Commission will give the industry and public a little more time to comment on the proposal to classify linear over-the-top video providers as multichannel video programming distributors (MVPDs), at least for the purposes of nondiscriminatory access to programming — just not as much of it as they had requested.

Several parties, including the National Association of Broadcasters and Telecommunications for the Deaf and Hard of Hearing (with the support of the American Cable Association), had pointed to the complexity of the issues involved and asked for an extra 30 days to comment.

"The commission’s general policy is not to grant extensions of time routinely," Media Bureau chief Bill Lake said in granting an extension, "but we find that given the complex issues involved here, the public interest warrants an extension of the comment and reply comment deadlines. Although the parties seek a 30-day extension, we believe that a two-week extension will give the public enough time to respond to the NPRM."

Comments are now due by March 3; reply comments must be filed by March 18. (The NAB and the other parties had sought deadlines of March 19 and April 3).

The FCC voted last December to propose giving linear OVDs nondiscriminatory access to cable-affiliated programming and local-TV station broadcasts, regardless of whether or not the distribution is facilities-based. That decision raises lots of questions about how to apply that definition and the ramifications of doing so.

The idea is to help promote online video as a competitor to traditional cable and satellite providers. The FCC has said that a technology-neutral definition of MVPD should yield more programming choices.

"Video is no longer tied to a certain transmission technology, so our interpretation of MVPD should not be tied to transmission facilities," FCC chairman Tom Wheeler said when the item was up for a vote.

In the past, the FCC has tentatively concluded that an MVPD must have a distribution facility to meet that classification.

According to multiple sources, the FCC is working on an item that would define an online video provider (OVD) that delivers a linear stream of programming as an MVPD, similar to a cable or satellite operator. That means it would have access to content through the FCC's program access rules, but also have to negotiate retransmission-consent with broadcasters.

The idea is that over-the top providers would have an FCC-enforced access to vertically integrated programming.

The item, which could be circulated as early as this week, reportedly asks what other MVPD rights and responsibilities beyond access and retrans carriage should extend to over-the-top providers.

An FCC spokesperson had no comment. But an FCC official speaking on background confirmed that the item proposed adopting a technology neutral definition of an MVPD.

That would mean reversing a tentative, bureau-level conclusion in the Sky Angel program-access complaint that having a facilities-based transmission path was necessary to be an MVPD. The FCC tentatively concluded that an MVPD has to have control of both the content and the transmission path—copper, fiber, satellite signals to be delivering a channel—and that an OVD distributor lacks that path since it does not control a facilities-based channel to deliver it.

The NPRM tentatively concludes that the entity would not need to own the transmission path to be an MVPD as long as it provides a continuous linear stream of prescheduled programming--not like a Netflix or other on-demand video programmer without a linear lineup.

The FCC had been considering giving OVDs a path to MVPD status through a marketing or joint venture with ISPs, but there appears to be no opt in or opt out status, said the FCC official, adding that you either are or are not an MVPD keyed to delivering that linear lineup.

Sky Angel, which moved its linear service to over-the-top delivery, suspended operations in January 2014, something it pointed out to the FCC in comments in June, explaining that it could not compete with traditional MVPDs withoug access to programming afforded MVPDs via FCC program access rules.

If OTT's gain MVPD status, they would secure access to TV stations via must-carry and retrans rules, but would also be subject to program-carriage requirements.

Such a decision could also insure that online video distributors have access to must-have video networks that would allow them to be competitive with traditional video suppliers like cable and satellite.

The FCC signaled in the Comcast/NBCU deal that it expected over-the-top video to become a competitor to traditional MVPDs going forward and, therefore, included conditions requiring the company to make its programming available to OTT providers on nondiscriminatory terms and conditions.

Giving OTTs MVPD status would also appear to mean would-be online TV station distributor Aereo could qualify for a compulsory license and have a path forward. But Aereo would also have to negotiate-retransmission consent payments with TV stations if it wanted to carry stations that did not opt for must-carry.

But as with the network neutrality rules NPRM, the FCC will be collecting content and the item is far from set in stone.

 Sky Angel, the former provider of predominantly religious pay Internet-protocol television services, filed its program access complaint against Discovery Communications in 2010 after Discovery decided to withdraw its programming from the Sky Angel IPTV service. Sky Angel had converted the service to IP delivery from direct-broadcast satellite in 2008. However, as the FCC acknowledged in seeking input on the definition of an MVPD in 2012, "the interpretation of these terms has legal and policy implications that extend beyond the parties to this complaint."

The National Cable & Telecommunications Association has argued that a transmission path is necessary to be an MVPD.

It told the FCC in comments on Sky Angel that the 1992 Cable Act was clearly intended to promote "facilities-based MVPD competitors," which would require facilities.

To define it otherwise, they say, would result in "expansive regulation of the Internet" and conferring rights an obligations on online entities the FCC does not track or license, may not have physical facilities in the U.S. and which "were never intended to be the subjects of such regulations."

Broadcasters have argued that if the FCC does give OTT's the rights to carry TV stations signals, they must also be subject to retransmission consent and program exclusivity rules.