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Pay TV Sub Growth Slows in Q1: LRG

The top 13 pay TV providers in the U.S., representing about 95% of the market, added fewer than 10,000 net video subs in the first quarter, well off from a gain of more than 250,000 in the year-ago quarter, Leichtman Research Group (LRG) found its latest quarterly analysis of the sector.

LRG said Q1 2015 marked the weakest first quarter for pay TV net adds since it began tracking the industry more than a decade ago. The first quarter is traditionally a strong period for the pay TV sector

LRG said the top nine cable MSOs shed about 60,000 video subs in Q1, versus a loss of 50,000 in the year-ago quarter.

Dish Network and DirecTV combined to lose 74,000 video subs in the period, versus a gain of 52,000 in 1Q 2014.

The top telcos added 140,000 video subs, down from 251,000 net adds in Q1 2014. LRG said the net video adds by the top telcos in Q1 2015 were the fewest of any quarter since Q4 2006.

Those top 13 providers still account for about  95.2 million subs – 49.2 million served by cable, 34.2 million by satellite TV, and 11.7 million by the top telcos.

“The traditionally strong first quarter for the pay-TV industry did not prove to be so this year,” LRG president and principal analyst Bruce Leichtman said, in a statement. “Despite virtually breaking even in the quarter, the first quarter of 2015 marked the first significant sign of an acceleration in pay-TV subscriber losses. In addition to changes in consumer demand for video services spurred by competition from alternatives, the decline of about 0.4% of subscribers over the past year was also driven by several providers becoming more discerning in customer acquisition and retention, focusing on higher-value/lower-churn customers at the expense of the volume of subscribers.”

In his analysis of Q1 2015, MoffettNathanson principal and senior analyst Craig Moffett said U.S. pay TV lost about 31,000 customers in the first quarter, compared to a gain of 271,000 subscribers in the same period in 2014.

While the rate of decline – about 0.5% over the past 12 months – was small, it was the “fastest rate of decline on record and it represents by far the largest sequential acceleration we have seen to date,” Moffett wrote.