* DirecTV makes first customer loss of 52,000
* Time Warner Cable loses 169,000 video customers
* TWC looks to Internet for growth
By Yinka Adegoke
NEW YORK, Aug 2 Stubbornly high U.S.
unemployment, a weak housing market combined with a mature
business prone to regular programming blackouts has seen more
than 400,000 American homes drop their pay-TV service since the
start of the year.
DirecTV Group, the No.1 U.S. satellite TV provider,
revealed its first ever quarterly customer losses on Thursday,
with some 52,000 homes dropping the service in the second
quarter. That was more than analysts expected from a company
long seen as the best run video provider in the
Also on Thursday, Time Warner Cable Inc, the No.2
cable provider said it lost more subscribers than analysts
expected with 169,000 customers leaving the service. While a
small per centage of Time Warner Cable company's 12.3 million
total customers, this is a 10th straight quarter of customer
losses. [ID: n L4E8J22FP]
"Basic video subscriber losses aren't getting better," said
Bernstein Research analyst Craig Moffett of Time Warner Cable.
He said in a client note that the company had done alright
overall but "it is hard to shake the perception of an
The biggest U.S. TV distributor, Comcast Corp,
lost 176,000 video subscribers, which was considered an
improvement as the rate of losses was better than recent
quarters. Of the big four distributors Dish Network Corp
, the other major satellite provider, said it lost just
10,000 subscribers, also considered an improvement.
To be sure the second quarter is traditionally the weakest
quarter for customer additions in the pay-TV business as people
move homes ahead of the summer and students leave college
campuses. Also the newer entrants to the TV market -- Verizon
Communications' FiOS TV and AT&T Inc's U-verse --
added 275,000 customers during the quarter.
The numbers usually improve somewhat in the third quarter
but the overall trends are ominous for traditional pay-TV
The maturity of the nearly fifty-year-old cable TV market
has raised the stakes leading to more bitter and prolonged
battles between distributors and their program maker partners.
These disputes now typically end up with customers losing some
of their favorite programming for days on end and adds to
customer weariness with pay-TV.
DirecTV for example lost 17 channels from MTV and
Nickelodeon parent Viacom for 10 days last month. The
loss of that many high profile networks for such a long period
is bound to have an impact on DirecTV's third quarter results
due three months from now.
The steady parade of customer losses has led to speculation
that customers are 'cutting the cord' and dropping the expense
of paying for TV altogether.
Time Warner Cable Chief Executive Glenn Britt disputed this
suggestion saying the numbers "are still quite small."
"We actually think a bigger issue in the market is that
there is a group of customers that are in really serious
financial shape, they have been out of work for a long time,"
Time Warner Cable, which added 59,000 Internet subscribers
during the quarter, has been emphasizing its growth ambitions
with the Internet.
"Our real opportunity for residential growth rests with our
high-speed data product," said Time Warner Cable President Rob
Marcus. "We have been postulating that that's the case for some
The idea of cord-cutting has gathered steam as several major
technology companies have held talks with program makers about
putting together TV packages that will be delivered via the
Internet. The idea would be to use cheaper, smaller TV packages
to attract customers to buy or use their services. So far Google
Inc, Intel Corp and Amazon are among
those known to have held talks.
Netflix Inc is an example of one company that is
already offering such services for streaming to customers on
demand. Rather than see Netflix as a rival, Time Warner Cable
has been promoting its Internet service as being robust enough
to deliver Netflix to customers.
"That is the mindset that informs our marketing efforts,"