SNL Kagan: Drop in U.S. Multichannel Subs ‘Elevates Specter of Cord Cutting’

MONTEREY: U.S. multichannel subscriptions saw their largest loss to date in the second quarter, according to the research firm SNL Kagan, as fears regarding the impact of cord cutting rise.

The U.S. cable, DBS and telco platforms collectively lost more than 600,000 video subscribers in the three months ended June 30, falling to 100.4 million combined residential and commercial subs at mid-year. The drop, which follows an uncharacteristically weak first quarter, is pointing toward a much larger decline for full-year 2015 than the industry produced between 2010 and 2014, during what could essentially be seen as a period of general malaise.

Q2 saw a "dramatic softening" in the telco video sector, along with an accelerated drop in DBS subs and continued declines in cable. While cable sub losses slowed, they remain by far the greatest source of downward pressure on multichannel subscriptions. Cable’s basic-subscriber losses, at 350,000, was at their lowest level since 2008.

The telcos increasingly appear to be trading subscriber gains for improved financials. AT&T's U-verse has aligned its strategy with DIRECTV’s focus on profitability. As a result of the belt tightening, the combined multichannel video subscribers served by FiOS and U-verse were flat at 11.7 million at the end of the second quarter, behind net adds of just 4,000.

The DBS segment lost an estimated 304,000 subscribers, as DIRECTV and DISH Network both reported record declines. The DBS segment retreated to just under 34 million subs.