Pay TV business stagnating, even during housing resurgence
The death knell is again sounding for the pay TV business, as multichannel video programming distributors (MVPDs) across the board reported subscriber growth slowdowns in the third quarter of 2012 at the same time there was a housing resurgence which should have signaled a pick-up in subscriber growth.
According to a New York Post article, MVPDs are facing a "hard reality" that "households are cord-cutting and seeking out TV programming via alternative means," which is leading to a flat pay TV business.
All this is going on at the same time "housing formation" is picking up, according to Bernstein Research. That means things are even worse than flat.
"Pay TV penetration of America's households is therefore falling, even while the number of pay TV subscribers is still inching higher," Bernstein analyst Craig Moffett noted in the Post story.
The situation means "the industry will have to rethink its entire business model and strategy," Dish Network (Nasdaq: DISH) CEO Joe Clayton said in a conference call covering the satellite provider's third quarter earnings and reported loss of 19,000 subscribers. Dish competitor DirecTV (Nasdaq: DTV), meanwhile, added 67,000 subscribers, about 32,000 less than Wall Streeters expected.
It's easy to understand why the situation has stagnated, according to Dish Chairman Charlie Ergen.
"The world has changed, video has gotten expensive and you have to redefine your business every 20 years," Ergen said, proclaiming that the "power is with the programmers."
- the New York Post has this story
Special report: Cable in the third quarter of 2012