Cable Subs Take Historic Plunge In Q3

Multichannel video subscribership was down for the
second quarter in a row, according to SNL Kagan, off 119,000 in the third
quarter of 2010 compared to a 346,000 gain in the same quarter of 2009 thanks
to a huge drop in cable subs--741,000 in the quarter--that more than wiped out
a gain of 476,000 by telco TV services (a 4% increase) and a modest 1%
boost for DBS of 145,000 subs.

Cable's decline was the biggest drop
since Kagan began tracking subs in 1980. Cable's share of the video market
has dropped to 60.3% from 62.9% in Q3 2009.

The MVPD market saw its first-ever decline in
the second quarter, when it dropped 216,000 subs.

The lure of over-the-top video, a down economy,
and higher churn rates are all cited as possible contributing
factors to the declines.

"Operators are pointing to a continuation of the
forces that pushed subscriber gains into negative territory in the second
quarter, including the weak economy, high unemployment and elevated churn of
former over-the-air households," said SNL Kagan senior analyst
Ian Olgeirson in announcing the findings. "However, it is becoming
increasingly difficult to dismiss the impact of over-the-top substitution on
video subscriber performance, particularly after seeing declines during the
period of the year that tends to produce the largest subscriber gains due to
seasonal shifts back to television viewing and subscription packages."

Those numbers could provide ammunition to cable
operator execs in Washington for a retransmission consent hearing Wednesday.
They are arguing that the old relationship between essentially monopoly cable
systems and TV stations in a market has transformed into an unbalanced equation
where broadcasters still retain their monopoly--must-buy, syndicated
exclusivity, etc.--while cable operators face tough competition from
satellite, telco and online TV.

But the figures could also supply broadcasters with fuel for their
argument for the value of their service, arguing that more people are cutting
the cord to return to over-the-air TV.

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.