Satellite Grows U.S. Multichannel TV Market as Millions Add Service

Boston, MA - April 7, 2005 - Although U.S. satellite TV providers signed up over three million customers last year, the impact on most cable operators was relatively small, says a new report from technology research firm Strategy Analytics. The report, "US Multichannel TV Update: Satellite Gains, But Does Cable Lose?" notes that while Direct Broadcast Satellite (DBS) operators DirecTV and EchoStar added 3.2 million new customers in 2004, the ten largest cable operators together lost fewer than 500,000 basic subscribers.

"DBS has robbed cable of the slow-but-steady growth it enjoyed up until the late 1990s, but its broader impact has been to expand the total base of multichannel TV homes," notes James Penhune, director, Strategy Analytics' Broadband Media & Communications research program. "While some new satellite customers formerly had cable access, a much larger number appear to be first-time multichannel customers."

The company also believes that cable subscriber losses will decline during 2005, as underperforming operators, such as Adelphia Communications and Charter Communications, are acquired or reorganized. At the same time, market leaders such as Comcast, Time Warner Cable and Cablevision, will expand availability of triple-play service bundles combining video, broadband Internet and IP-based telephony.

Finally, heightened competition between satellite and cable companies will increase pressure on regional telephone companies as they begin to offer multichannel TV delivered over their own broadband networks later this year. With DBS and cable adding digital customers and launching new services, telcos may be forced to focus on lower prices as their chief selling point during the early stages of IPTV deployments - an unappealing option given the high costs associated with launching video.