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Satellite TV orbits closer to cable

A number of customers leaving cable companies are turning to satellite TV providers, ending nine straight years of growth for the cable TV industry, the FCC says.

The number of cable TV subscriptions will be lower in 2002 than the year before, ending nine straight years of growth, the Federal Communications Commission predicted in a recent report.

A worsening economic climate and lower consumer spending contributed to what "may be the first year in which the industry as a whole has had a net loss of subscribers," the FCC said in its "Ninth Annual Report on Video Competition."

A percentage of customers leaving cable companies are turning to satellite TV providers, such as DirecTV, which grew at a "significantly higher (rate) than cable subscriber growth," the FCC said. The number of people subscribing to satellite TV companies increased from 19.3 million to 21.1 million, a 9 percent jump, during the first half of 2002, the report showed.

The number of cable TV subscribers, on the other hand, increased from 68.6 million to 68.8 million households, a growth rate that's "basically flat" when compared with the same time period in 2001, the FCC said.

The findings should give the cable TV industry more incentive to make 2003 the year to "reposition itself and win back the subscribers it's lost" by adding perks, such as bundling broadband Web services, that satellite providers can't or have yet to offer, said Lydia Loizides, a senior analyst at Jupiter Research.

"We're coming off a year where cable companies have been hit really hard, both from the landscape of their subscribers and Wall Street," she said. "Many are struggling to show profitability while shrinking net subscriber adds."

Comcast, the nation's largest cable TV company, declined to comment on the FCC report.

A spokesman for The National Cable & Telecommunications Association, the trade group that speaks on behalf of the cable TV industry, said he "won't dispute the FCC's findings," although most cable operators won't report their final 2002 figures until next month.