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Endless Cable TV Rate Hikes Not Sustainable
Something has to give, according to Sanford Bernstein analyst
by Karl Bode 05:10PM Friday Sep 10 2010
Sanford Bernstein analyst Craig Moffett is a prodigious telecom industry quote machine and, as a stock-jock concerned with short-term gain, a frequent poo poo'er of network upgrades. This week, Moffett is warning the cable industry that they won't be able to simply keep raising rates (often bi-annually). Discretionary consumer spending is falling, and will continue to do so for several years. Despite the recession people keep paying for TV services -- though that's going to change, says Moffett:
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"The media industry is "intractably addicted to price increases," he argued...."If you are a serious student of history, you ought to be thinking pretty hard about the fact that, for the first time in 25 years incomes are stagnant and savings rates are rising and the available pool of funds is shrinking materially."
Of course, Moffett has also stated he believes cord cutting (or people dumping cable for Internet video) is "the most over-hyped and over-anticipated phenomenon in tech history." So that raises the question: what happens when people tired of high cable prices and force channel bundles suddenly have the option of a la carte Internet video? It doesn't take a highly-paid Sanford Bernstein analyst to see where this is going.

Last quarter, TV operators started seeing real, significant subscriber losses for the first time, though these losses were largely thanks to the economy. TV operators aren't even seeing a real impact from Internet video yet, though such an impact is inevitable for all programming except perhaps live events -- even if it takes the better part of a decade. Still, there's a sense of over-confidence from a TV sector that believes that can endlessly jack up prices with no repercussion -- and as such it's a sector that's absolutely begging for disruption.

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Waterbury, CT

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I couldn't disagree more

with this whole discussion of "endless price hikes" and that cable prices are expensive.

For starters..there hasn't been biannual price hikes in cable tv prices that i'm aware of. Perhaps a cable operator raised the price of another service or piece of equipment..ie: Comcast raising their modem price from 3.00 to 5.00 but along with that came a massive nationwide upgrade to docsis 3.0 and doubling of peoples speeds. Not to mention free routers along with that. But that doesn't mean they raised their tv prices twice in one year in any year that I've known.

And second..the services that companies like Comcast provide are NOT expensive. They are one of the best values out there that any consumer purchases on any day.

You can take an entire family..Mom, Dad and all the kids..
and give them 24/7 internet access..unlimted calling nationwide with all the calling features..and 24/7 television with hundreds of channels..hd..on demand..dvr..all the premium channels...and for that ENTIRE FAMILY..you are talking about a service that costs maybe 5 or 6 dollars a day.

Folks.you aren't going to go out and buy one happy meal for the little kid for that kind of money anymore.
Much less what an entire family can use and enjoy.

Someone thinks nothing of stopping in the corner store and dropping 2 dollars MORE than that...on a pack of cigarettes.

Put 2 gallons of gas in your tank and you arrive at that figure.

Buy a loaf of bread and gallon of milk...and you're at that amount as well.

But what we are talking about is 24/7 access for an entire family..half the price of even one movie ticket..to give someone not only ONE service..but all of these.
For everyone to use and enjoy all day long.

These services are NOT expensive. They are one of the greatest values out there that consumers can buy.

Some people spend so much time trying to find cost "savings" around that fact and wind up spending more trying to piece everything else together from different places and providers..rather than looking to a Comcast or whomever for their bundle offerings. And I'm not just saying Comcast here..I'm saying Time Warner..Verizon fios..AT&T Uverse..and whomever.
They ALL have a very good deal going for consumers. And they ALL represent a very good value in this economy....compared to so much else that we as consumers spend our money on.

Is your internet connection worth about the 2.00 a day that it costs not only you..but your ENTIRE family? In my mind it certainly is. And that's what it costs when priced into these bundles. And it's the same across the board..from tv to phone.

These providers are not expensive. Not at all.
In fact..it can be argued that they're inexpensive when looking at so many other things. How about that 100.00 a month cell phone bill? People think nothing of dropping that for some 3 inch screen but somehow think that phone..tv and internet in a bundle at 150.00 is a rip off.

It's not. It's downright one of the best consumer values going today.


Karl Bode
News Guy

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reply to Bobcat79

Re: Bi-annually?

I think you knew I meant twice a year (since that's what most cable operators do and that's the definition of the word (semiannual is a synonym), but just chose to be contentious.