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News Analysis
Pay TV Has Lost 400,000 Subs? Hell, No!
By Swanni 

Washington, D.C. (August 3, 2012) -- Yesterday, I reported here how a group of journalists unwittingly conspired to create the mistaken perception that HBO was beating the 'cord cutters' and experiencing strong subscription growth in the U.S. Today, I am back with another sad tale of lazy, pack journalism and this time its victim is the truth about Pay TV services in the U.S.

Reuters published an article yesterday under the headline: 'Americans Drop Pay TV; Business Matures in Weak Economy.' The story was triggered by recent financial reports showing DIRECTV, Time Warner Cable and Comcast combining to lose roughly 400,000 subscribers in the second quarter.

In fact, the article leads with a paragraph saying 400,000 Americans have dropped their pay TV services and a suggestion that things will not get better for pay TV in this economy. There is also some verbiage  raising the possibility that more and more Americans are 'cutting the cord' -- dropping pay TV and watching online video to save money.

But here's the problem with the Reuters' thesis: While the aforementioned cable and satellite operators did indeed lose 400,000 video subs in the second quarters, telco TV services Verizon and AT&T, which are pay TV services, too, actually added 275,000 subscribers in the second quarter. So the actual loss of pay TV subscribers in the second quarter was roughly 125,000, not 400,000.

Considering that pay TV services are in about 85 million U.S. homes, losing 125,000 -- which represents a small fraction of one percent of their total audience -- hardly constitutes a trend, much less a cold, hard fact that cord cutters are slicing up the pay TV industry.

But that little fact was not enough to prevent a stampede of pack journalists from rushing to their keyboards to pound out even more alarmist fare. CNET.com, normally a beacon of common sense, ran a story under this headline: "Pay TV Is On The Ebb As Customers Cut the Cord." The CNET piece then misquoted the Reuters story in the lead:

A look at the numbers shows that subscribing to pay-TV services is on the ebb. According to Reuters, more than 400,000 TV watchers have "cut the cord" since January."

Reuters actually didn't say that. The wire service said 400,000 dropped cable and satellite services since January, not that 400,000 cut the cord of pay TV.

To make matters worse, the CNET story doesn't even mention that AT&T and Verizon added 275,000 subscribers in the second quarter, leaving the impression that the pay TV industry actually lost 400,000 subs.

Judging from the story, the CNET writer seemed more dedicated to pushing the 'cord cutting' angle than reporting all the facts.

There are tons of devices and Web sites that let people watch cable TV shows and movies via the Internet without needing to subscribe to a pay-TV service. This may be one of the reasons why subscribers are dropping like flies..." the CNET article states.

But CNET wasn't the only one to go rogue on this issue.

Based on the Reuters report, BGR.com wrote an article saying 400,000 people have dropped pay TV services this year; the site made no reference to the telcos picking up subs. The San Jose Mercury News republished the Reuters story under the headline: "Americans Are Cancelling Their Pay TV Subscriptions In Droves."

In droves, huh? 125,000 out of 85 million plus?

Ars Technica was one site that got it right. The tech pub noted that the sub losses were small and it stressed in the second paragraph that the telcos added 275,000 subs. So, kudos to Ars Technica!

But Reuters? CNET? San Jose Mercury News? Shame on you, today.

Comment on this story below.



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