Years of basic-video customer declines and competitive onslaughts from satellite TV and telephone companies have helped chip away at cable’s dominance in the top cities in the country. MSOs now hold a majority of pay television subscribers in just five of the top 10 Nielsen designated market areas, or DMAs, according to research provided by television-industry research stalwart SNL Kagan to Multichannel News.
Cable companies have lost more than 10 million subscribers since the beginning of the decade — from the peak of 66.9 million video customers in 2001 to 56.4 million in 2012. That decline is evident in the SNL Kagan research. Cable has lost the market-share crown in Dallas-Fort Worth — 27.01% vs. 44.3% for satellite in a traditionally highly penetrated satellite TV region — and has yielded much ground in other top DMAs, including Los Angeles, Atlanta, Houston and Washington, D.C.
According to SNL Kagan, cable controlled 44.29% of the Los Angeles market (compared to 38.51% for satellite and 17.2% for telcos); 48.31% in Atlanta (versus 41.62% for satellite and 10.07% for telcos); 44.02% in Houston (compared to 37.02% for satellite and 18.96% for telco) and 46.27% in Washington, D.C. (versus 27.85% for satellite and 25.87% for telco).
Cable operators still maintain majority rule in large, densely populated markets like New York (67.63%), Philadelphia (63.91%), Boston (69.37%), the San Francisco Bay area (59.43%) and Chicago (57.07%).
But even those strongholds could feel added pressure, especially from telcos, as satellite TV giants DirecTV and Dish Network have experienced customer losses in recent years.
In a recent research report, Moffett Research principal and senior analyst Craig Moffett noted that in Staten Island, N.Y. — the only New York City borough where Verizon Communications’ FiOS TV service is widely available — Time Warner Cable has lost half of its customers in the past four years.
But time and Verizon’s decision not to expand its network beyond its current cities may be on cable’s side. Moffett has noted that while the fiber- to-the-home infrastructure of FiOS is superior to cable’s hybrid fiber coaxial (HFC) network, it is only available in about 14% of the country. Even AT&T’s U-Verse fiber-to-the-node network still operates at a “multiple orders of magnitude capacity disadvantage against cable,” Moffett wrote.
But he and others warn that in markets where FiOS is available, it is quickly gaining strength.
“[I]n markets where FiOS has been deployed, competition for market share will be perennially more intense,” Moffett wrote. “Pricing power for both video and broadband will be perennially impaired. Negotiating leverage for programming will be perennially lessened.”
TAKEAWAY
Satellite and telco TV providers have cut deeply into cable’s video-subscriber lead in the largest U.S. markets.
TOP 10 CABLE MARKETS
Ranked by number of cable subscribers, Q1 2013:*
1 New York
2 Los Angeles
3 Philadelphia
4 Chicago
5 Boston (Manchester, N.H.)
6 San Francisco-Oakland-San Jose
7 Seattle-Tacoma
8 Tampa-St. Petersburg, Fla. (Sarasota)
9 Atlanta
10 Washington, D.C. (Hagerstown, Md.)
* Ranking does not reflect Nielsen’s top 10 DMAs
SOURCE: SNL Kagan
