Pay-TV Providers Raising Subscription Rates: Analyst

Cable, satellite and phone companies are all raising rates for television services this year, even as some chase penny-pinching households with new, lower-priced basic packages.

Dish Network is seeking the greatest increases, raising subscriptions on average by 11%, according to research firm Sandford Bernstein (via Variety). But the satellite service provider counters that its basic package is still priced much lower than cable rival.

Bernstein analyst Craig Moffet reports that Time Warner Cable will raise rates on average by 7%, while Comcast, DirecTV and AT&T all will hike prices by 4% and Cablevision by 3%.

Pay-TV service providers continue to compete on price for new entry-level subscribers, however. Major cable companies including Comcast and Time Warner Cable have dropped package prices to as low as $29.99/month in select cities, according to The Philadelphia Inquirer.

Continued Volatility Among Pay-TV Services: Research

The overall pay-TV market in the U.S. has contracted for a second consecutive quarter, according to research firm SNL Kagan — leading to new speculation over the presumptive “cord cutting” phenomenon.

The total pay-TV customer base fell by 119,000 customers in the third quarter of 2010, compared to a 346,000 gain reported in third-quarter 2009. During the second quarter, the losses were steeper: 216,000.

SNL Kagan attributes the third-quarter fall-off exclusively to cable service providers, which lost an estimated 741,000 basic video customers during the quarter. The decline is surprising since historically Q3 “tends to produce the largest subscriber gains due to seasonal shifts back to television viewing and subscription packages,” according to the research firm’s Ian Olgeirson.

Telco TV providers added 476,000 customers in the third quarter, while satellite TV companies added 145,000. But as in Q2, the telco and satellite TV providers’ gains don’t fully offset cable’s loss.

Cable and media executives have been adamant that the volatility is due to economic factors: Variety has a roundup of the latest comments. SNL Kagan agreed with the industry’s own assessment over the summer. However, Olgeirson says, “it is becoming increasingly difficult to dismiss the impact of over-the-top substitution on video subscriber performance.”

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