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Pay-TV losing customers, analyst says

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By Bob Fernandez
The Philadelphia Inquirer
Published:
One of pay-TV's top trend analysts, Bruce Leichtman, says the biggest pay-TV companies lost 80,000 TV subscribers over four quarters, a first in his research over more than a decade.
He attributed the decline to slow housing, a saturated pay-TV market, and some cord-cutting. The loss was about 0.1 percent of the 95-million subscriber TV market.
He calculated the subscriber numbers for the second, third and fourth quarters of 2012 and the first quarter of 2013, a period that captured seasonal swings in subscriber gains and losses.
Cable- and satellite-TV companies, Leichtman noted, also seem to be de-emphasizing the marketing of services to customers who may drop the TV service, seeking more profitable subscribers.
Leichtman cautioned against a "knee-jerk" reaction that the Internet was killing the pay-TV business with the 80,000 aggregate loss. "It's not swirling down the toilet bowl," he said, describing the industry as flat.
Leichtman, who runs Leichtman Research Group Inc., estimated that 87 percent of U.S. households subscribe to a TV service and that future TV growth is likely to be dependent on new-home construction.
Though this was the first four-quarter period he recorded a subscriber loss over pay-TV subscriber cycles, Leichtman said the industry has been flat since the "digital transition," which was completed in June 2009.
During this transition, over-the-air TV networks upgraded their transmission signals to digital technology from analog, forcing residents to purchase new TVs or obtain government-financed digital adapters.
The transition, Leichtman said, forced many pay-TV holdouts to subscribe to cable- or satellite-TV because of hassles related to the transition -- a last burst of new TV subscribers for the industry.

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