From CNET:

In the second quarter of 2010 paid TV subscriptions fell for the first time ever, with cable taking the biggest hit, according to the research firm SNL Kagan.

A weak U.S. economy is the main reason the firm cited for the dip in subscriptions, as more consumers look for ways to cut down on monthly expenses. Last year's digital TV conversion may have also played a role in lower growth rates with some people canceling service after promotions on new digital TV packages ran out, the firm said.

The entire paid TV industry, which includes cable, satellite, and phone companies, lost 216,000 customers in the second quarter. A year ago, the industry gained 378,000 new customers, according to SNL Kagan. Six of the eight largest U.S. cable operators reported their worst quarterly video subscriber losses.

Surely the recession has much to do with this. But, as CNET's Marguerite Reardon notes, part of what's going on is people switching to Hulu and other Net-based video services. That allows them to choose what they want to watch for free and not pay for a 400 garbage channels that they never watch. I wonder whether, in response to lost eyeballs to "over-the-top" video, cable companies will rethink their opposition to a la carte pricing. I would be happy to pay Verizon FiOS more than I pay now if more high-quality channels and networks were available and I could pick and choose among them and not have to pay for all the junk.