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The Cable Industry Can No Longer Deny the Cord Cutting Threat

Analysts estimate that the pay TV sector lost a record 762,000 pay-TV subscribers last quarter -- roughly five times more than the total number of lost subscribers during the same quarter last year. Dish Network lost 143,000 subscribers, even when the company's Sling TV additions were figured in. AT&T lost 266,000 subscribers during the same period, again not offset by additions to its DirecTV Now streaming service. Charter was also hard hit, itself losing around 100,000 subscribers during the first quarter.

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One of the few spared companies was Comcast, which only managed to eek out a 42,000 subscriber net gain -- in large part thanks to the company's growing cable broadband monopoly.

But by and large it was another very ugly quarter for the cable and broadcast industry, which still hasn't seriously addressed the awful customer service, skyrocketing prices, and ongoing contrast disputes (and accompanying blackouts) that have a growing number of consumers tired of traditional cable TV. While these providers spent years trying to downplay cord cutting, the trend is now stark enough to be denial proof.

"For the better part of 15 years, pundits have predicted that cord-cutting was the future," an apocalyptic Craig Moffett wrote in a research note to investors. "Well, the future has arrived."

And Moffett, it should be noted, used to downplay cord cutting at every conceivable opportunity. He's no longer laughing.

"The litany of worsts is largely the same when one considers the data from the perspective of programmers," Moffett added, turning to sinking ratings. "Worst-ever first quarter sub losses (495,000); worst ever rate of decline (-1.3%); worst ever acceleration in the rate of decline (50 basis points). … It is the nature of skinny bundles that each includes a different subset of cable networks. Most individual cable nets, therefore, did materially worse."

So far, there's still a major segment of the cable and broadcast industry that seems incapable of learning any lessons from this. So as more and more streaming alternatives emerge, and traditional cable TV prices continue to skyrocket, expect the bloodshed to continue. At least until many of these companies are finally willing to embrace the "unthinkable": actually competing on price.

Most recommended from 84 comments


snic
join:2009-10-14
usa

22 recommendations

snic

Member

Don't worry, Ajit Pai to the rescue

As cable companies lose subscribers to cable TV packages, they gain subscribers to their broadband-only services. And just in time, the FCC wants to revoke net neutrality, which cable companies love because it would allow them to charge content providers for access to their customers.
ISurfTooMuch
join:2007-04-23
Tuscaloosa, AL

19 recommendations

ISurfTooMuch

Member

And it'll only get worse...for sports channels

As bad as this is for programmers, the real bloodbath for sports channels is yet to come. At the moment, all of the new OTT services include them in their packages, but, sooner or later, someone is going to offer a sports-free package, and the lid is going to come off. The other issue is going to be with people who only want sports during certain times of the year. With traditional cable, they didn't have a choice, but, with OTT services, they can sign up and cancel at will.

And the problem for ESPN isn't just that they're going to see revenue decline. That's bad enough, but they have all these very expensive contracts they have to keep paying on. Basically, they've gone into an insane amount of debt on the assumption that revenue would keep increasing or at least stay the same. When it starts to decline, they're going to have to figure out how to keep writing those big checks to the sports leagues.
elefante72
join:2010-12-03
East Amherst, NY

12 recommendations

elefante72

Member

Sports

Until OTT and cable really have a frank discussion about sports these OTT offers are nothing more than a poorer quality representation of the traditional cable offer. EVERY single one (hulu, DTVN, Sling, Youtube, etc) is specifically hobbled in some way on purpose by content creators to make them undesirable to some segment of the population. Disney/ESPN has a stranglehold, and once that is broken then the house of cards will fall.

Viacom thinks sitting this one out is a good idea. Hint: It's not.

Even something like Sling orange, 50% of the cost of that service is probably Disney, and 1 stream.

Hulu is the worst yet. That is like travelling on Spirit with full service pricing.
margegenever
join:2010-08-19
USA

8 recommendations

margegenever

Member

Only a threat to satellite

Only satellite TV providers are threatened. Cable providers will simply make it up in broadband access pricing.

Cut the cord - as long as that cord does not provide your internet access....

WHT
join:2010-03-26
Rosston, TX

5 recommendations

WHT

Member

Except For Moffett

"For the better part of 15 years, pundits have predicted that cord-cutting was the future," an apocalyptic Craig Moffett wrote"

Moffett downplayed cord cutting for over a decade until last year. Obviously he was not one of the pundits.

DaMaGeINC
The Lan Man
Premium Member
join:2002-06-08
Greenville, SC

2 recommendations

DaMaGeINC

Premium Member

Al LA Carta

I'm never going to PAY for tv as long as it's riddled with commercials and I can't watch WHAT I WANT WHEN I WANT. Only thing keeping them in buisness is elderly, sports fans, and people who don't know how to stream.