NEW YORK (AP) — The weak economy is hitting Americans where they spend a lot of their free time: at the TV set.

They’re canceling or forgoing cable and satellite TV subscriptions in record numbers, according to an analysis by The Associated Press of the companies’ quarterly earnings reports.

The U.S. subscription-TV industry first showed a small net loss of subscribers a year ago. This year, that trickle has turned into a stream. The chief cause appears to be persistently high unemployment and a housing market that has many people living with their parents, reducing the need for a separate cable bill.

But it’s also possible that people are canceling cable, or never signing up in the first place, because they’re watching cheap Internet video. Such a threat has been hanging over the industry. If that’s the case, viewers can expect more restrictions on online video, as TV companies and Hollywood studios try to make sure that they get paid for what they produce.

In a tally by the AP, eight of the nine largest subscription-TV providers in the U.S. lost 195,700 subscribers in the April-to-June quarter.

That’s the first quarterly loss for the group, which serves about 70 percent of households. The loss amounts to 0.2 percent of their 83.2 million video subscribers.

The group includes four of the five biggest cable companies, which have been losing subscribers for years. It also includes phone companies Verizon Communications Inc. and AT&T Inc. and satellite broadcasters DirecTV Group Inc. and Dish Network Corp. These four have been poaching customers from cable, making up for cable-company losses — until now.

The phone companies kept adding subscribers in the second quarter, but Dish lost 135,000. DirecTV gained a small number, so combined, the U.S. satellite broadcasters lost subscribers in the quarter — a first for the industry.

The AP’s tally excludes Cox Communications, the third-largest cable company, and a bevy of smaller cable companies. Cox is privately held and does not disclose subscriber numbers.

Sanford Bernstein analyst Craig Moffett estimates that the subscription-TV industry, including the untallied cable companies, lost 380,000 subscribers in the quarter. That’s about one out of every 300 U.S. households, and more than twice the losses in the second quarter of last year. Ian Olgeirson at SNL Kagan puts the number even higher, at 425,000 to 450,000 lost subscribers.

The second quarter is always the year’s worst for cable and satellite companies, as students cancel service at the end of the spring semester. Last year, growth came back in the fourth quarter. But looking back over the past 12 months, the industry is still down, by Moffett’s estimate. That’s also a first.

The subscription-TV industry is no longer buoyed by its first flush of growth, so the people who cancel because they’re unemployed are outweighing the very small number of newcomers who’ve never had cable or satellite before. Dish CEO Joe Clayton told analysts on a conference call Tuesday that the industry is “increasingly saturated.”

But like other industry executives, Clayton sees renewed growth around the corner. Though his company saw the biggest increase in subscriber flight compared with a year ago, he blamed much of that on a strategic pullback in advertising, which will be reversed before the end of the year.

Other executives gave few indications that the industry has hit a wall. For most of the big companies, the slowdown is slight, hardly noticeable except when looking across all of them. Nor do they believe Internet video is what’s causing people to leave.

Glenn Britt, the CEO of Time Warner Cable Inc. said the effect of Internet video on the number of cable subscribers is “very, very modest;” in fact, so small that it’s hard to measure.

SNL Kagan’s Olgeirson said the people canceling subscriptions behind, or never signing up, are an elusive group, difficult to count. Yet he believes the trend is real, and he calls it the “elephant in the room” for the industry.

Anecdotal evidence suggests that young, educated people who aren’t interested in live programs such as sports are finding it easier to go without cable. Video-streaming sites like Netflix.com and Hulu.com are helping, as they run many popular TV shows for free, sometimes the day after they air on television.

In June, The Nielsen Co. said it found that Americans who watch the most video online tend to watch less TV. The ratings agency said it started noticing last fall that a segment of consumers were starting to make a trade-off between online video and regular TV. The activity was more pronounced among people ages 18-34.

Olgeirson expects programmers to keep tightening access to shows and movies online. A few years ago, Olgeirson said, “they threw open the doors,” figuring they’d make money from ads accompanying online video besides traditional sources such as the fees they charge cable companies to carry their channels. But if looks as if online video might endanger revenue from cable, which is still far larger, they’ll pull back.

“Are they really going to jeopardize that? The answer is no,” Olgeirson said.

Already, News Corp.’s Fox broadcasting company is delaying reruns on Hulu by a week unless the viewer pays a $8-a-month subscription for Hulu Plus or subscribes to Dish’s satellite TV service. Other subscription-TV providers may join in the future. TV producers and distributors want to discourage people from dropping their subscriptions.

Moffett believes it’s hard to separate the effect of the economy from that of Internet video. Subscription-TV providers keep raising rates because content providers such as Hollywood studios and sports leagues demand ever higher prices. That’s causing a collision with the economic realities of American households.

“Rising prices for pay TV, coupled with growing availability of lower cost alternatives, add to a toxic mix at a time when disposable income isn’t growing,” Moffett said.

(Copyright 2011 by The Associated Press. All Rights Reserved.)

Comments (13)
  1. LiberalButConservative says:

    go OTA HD its free if you have analog antenna

  2. Hank A. says:

    Cable TV or a dish is a rip off !!! They lure you with a cheap introductory offer for the first few months then jack up the rates after the period is over. I’ve also heard they are not very good at customer service. If you have a problem they basically won’t do much of anything for you unless you pay for it ! Also, basic cable is mostly nothing but a lot of re-runs. I’ve got better things to do with my money !

  3. Lady63 says:

    We have Dish and each year the rates go up. HD is not free, you pay up front for it. With people out of work and losing their homes you’d think these companies would keep or lower their rates until people get on their feet. Goes to show you who is making the big bucks. Now people are cutting what they have to to live.

  4. Steve says:

    I didn’t see any mention of over-the-air TV, which is about ten times more attractive now than before the analog to digital conversion. With Netflix and an antenna, I have more than I need. Yes, antenna TV is real HD, I still cannot believe the quality.

  5. DC says:

    I don’t even have a TV as I’d rather be outside hiking and biking. You can have your 300+ channels of garbage, but the great outdoors are priceless!

  6. larrybob says:

    “Such a threat has been hanging over the industry” So competition is a threat? I guess so considering how badly most cable companies (like comcast) have treated their competition and customers that they’d see being treated similar as a threat. Be prepared to make huge compensations to cover their loss

  7. Luda says:

    We cancelled our cable service mostly because of one reason – too many commercials. It’s impossible to watch – the commercials are long, loud, and frequent. It felt like paying money not for entertainment but for advertisement being pushed down our throats

  8. Shelly says:

    They didn’t consider the fact that people think it’s just plain outrageous to charge incredible prices so the brain can rot? It’s ridiculous that Comcast thinks it’s perfectly ok to charge $200 a month for TV.

  9. HooDatIS? says:

    outrageous prices and terrible installation fees
    http://wp.me/p1sC4M-ok

  10. redneckwriter says:

    “The U.S. subscription-TV industry first showed a small net loss of subscribers a year ago. This year, that trickle has turned into a stream. The chief cause appears to be persistently high unemployment and a housing market that has many people living with their parents, reducing the need for a separate cable bill.”

    How about the fact that subscription-TV is just to damn expensive?

  11. Chuck says:

    I own 3 HDTV’s and each unit has it’s own DVR. I tape programs so that I don’t have to watch commercials. I simply fast forward through them. I just paid my monthly Directv bill of 176.26. I have the full meal deal including the NFL Package. It is good to be successful in life and not have to depend on Obama’s government programs. Only losers do that.

  12. John Shue says:

    Hey Chuck when you lose your job you wont be singing the same song.

  13. John Shue says:

    Oh and btw- one does not TAPE on a DVR.

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