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Subscribers Pull Plug on Pay TV in Q2

The multichannel TV industry suffered its biggest loss of
customers in its history during the second quarter, according to new figures
from SNL Kagan.

Kagan said the number of subscribers to cable, DBS and telco
video services fell by 216,000 customers to 100.1 million in the quarter. One
year ago, the number of subscribers increased by 378,000 customers.

"Although it is tempting to point to over-the-top video as a
potential culprit, we believe economic factors such as low housing formation
and a high unemployment rate contributed to subscriber declines in the second
quarter," said SNL Kagan Analyst Mariam Rondeli. "We are also seeing churn
resulting from the broadcast digital transition, which boosted video uptake
early last year, as many have abandoned their paid subscriptions once initial promotional
contracts expired."

The damage was worst for cable. MSO's lost 711,000
customers, with six of the top eight operators showing their worst-ever
quarterly declines in video subscribers.

DBS added 81,000 subscribers and the telcos picked up
414,000 subscribers. That dropped cable's share of video subscribers to 61%
from 63.6% a year ago. Telcos now have a 6% share of the market, up from 4.3% a
year ago.