Wall Street Suddenly Wakes Up To Cord Cutting

from the good-morning-sunshine dept

Tue, Aug 11th 2015 3:09am — Karl Bode

Most of the cable and broadcast industry's cord cutting denial is aimed at investors, who -- if you've yet to realize -- may not always have the firmest understanding of the technology they're investing in. While many investors have been buying the cable industry's argument that cord cutting either doesn't exist or is only something done by losers and nobodies, the recent sharp decline in ESPN viewership appears to have finally woken the investment community from its adorable slumber.

As we recently noted, ESPN has lost 7.2 million viewers in the last four years, and a little more than three million in the last year. Since ESPN is annoyingly force-bundled with most basic cable subscriptions a lot of these users are cord cutters. Many more are being lured away by the new realm of "skinny" cable options that may not include ESPN -- options ESPN has been suing to stop to "protect innovation." ESPN is stuck in legacy industry purgatory: offer a standalone streaming service and accelerate cord cutting -- or refuse to offer a standalone streaming service -- and accelerate cord cutting. Either way, the train has left the station.

When Disney earnings last week indicated ESPN's fortunes are getting worse, investors in all of the major cable and broadcast companies suddenly became notably nervous as they collectively realized ESPN is no longer the untouchable television juggernaut it wanted everyone to believe it is:

"In the old days — basically, up until a month ago — most people in the video world assumed ESPN was untouchable. It commanded the biggest subscriber fees from traditional pay TV providers, and even if you imagined that one day people would start buying TV over the Internet from people like Apple, it seemed as though it would do just fine in that scenario, too."

And ESPN's been one of the more solid performers. Children's programming has been absolutely demolished by services like Netflix. Investors and cable executives have tried to argue that they can make up for cord cutters and ratings drops by endlessly raising subscriber TV rates, though they'd quietly been warned for years that this wasn't a winning long-term strategy. The ugly truth is that cable and broadcast is going to have to compete on price if it wants to adapt to the internet video revolution, and that's a message that's hard to hear when your head is planted squarely in the sand.

Just wait until Wall Street realizes (perhaps in 2018?) that there are tens of millions of young Americans who've never signed up for a cable subscription and have no intention of ever doing so.

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Filed Under: cord cutting, espn, internet, streaming, wall street
Companies: disney

28 Comments

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Michael, 11 Aug 2015 @ 3:21am

Just wait until Wall Street realizes (perhaps in 2018?) that there are tens of millions of young Americans who've never signed up for a cable subscription and have no intention of ever doing so

Or when they realize that tens of millions of young Americans would rather invest money directly via crowdfunding rather than purchasing stock on Wall Street.
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- jupiterkansas (profile), 11 Aug 2015 @ 7:41am
  
  Re:
  Crowdfunding isn't an investment. It's more of a donation or pre-sale.
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  - Anonymous Coward, 11 Aug 2015 @ 8:04am
    
    Re: Re:
    Its more of a hopeful donation-based investment, really.
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    - jupiterkansas (profile), 11 Aug 2015 @ 12:34pm
      
      Re: Re: Re:
      An investment means you hope to generate a profit. You don't profit from crowdsourcing. At most, you get a product, which makes it a conditional pre-sale.
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me@me.net, 11 Aug 2015 @ 3:58am

Ththey find themselves where the music industry once did
They could have offered ala carte but no, bundle, bundle, bundle

Every action brings reaction, now its adapt or die.
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Anonymous Coward, 11 Aug 2015 @ 4:30am

Their apathy is bringing about their own demise
My wife and I finally had it with Cox Cable. After months of service interruptions and every channel we watch randomly go temporarily off air for some reason. We terminated our cable and picked up a Roku. There's been times I did look back but not having to deal with service calls and constant customer service transfers/holds brings me back. Now if only I can find a real international news channel, I'd be set.
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- Anonymous Coward, 11 Aug 2015 @ 7:35am
  
  Re: Their apathy is bringing about their own demise
  see if you would be happy with SkyNews, in Roku!
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- Anonymous Coward, 11 Aug 2015 @ 3:20pm
  
  Re: Their apathy is bringing about their own demise
  BBC World and Al Jazeera English :) Those two will give you most of what you'd want.
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- Nameless Nobody, 1 Nov 2015 @ 4:45pm
  
  Re: Their apathy is bringing about their own demise
  You can get great international channels via Channel Master, which in addition to getting superlative HDTV football games way better reception than cable or Dish- (and other sports) on local channels, also offers free Internet based channels from France, Russia, BBC, etc along with OTA (over the air) Local channels. BTW, Disney's Eiger might be the leading media magnate with his head in the sand. "WHAT, we can't charge for both Pay-TV and then feed them 14 minutes of Procuct Ads to go with their 42 minutes of content per hour?" - the other 4 minutes go to Channel Ads. Eiger needs to understand that now he's so outdated that he'suddenly driving a Ford Tin-Lizzie straight out of the 1930's ... AND THE PUBLIC IS NOT GOING TO TAKE IT ANYMORE !! Nameless but also Prevasive here ...
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Groaker (profile), 11 Aug 2015 @ 4:33am

Young people only?
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Groaker (profile), 11 Aug 2015 @ 4:35am

Young people only?
I "sell" (for kudos, not money) cord cutting to seniors, or which I am one. Few have any problem hooking it up. Of those that do it is more fear of causing damage than lack of knowledge.
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Anonymous Coward, 11 Aug 2015 @ 5:28am

Cut/Uncut
I've cut and un-cut in the last year. So even though statistically I'm a cable subscriber now, in the long run they are dead to me.

I cut the cord for a year and didn't miss it. I even live in an area where I don't get (much) broadcast. (In a major city, but in a reception black hole.) I still need internet, but I got all the TV I cared to see through my Roku. Any live events I really wanted I was able to stream live on my laptop.

I recently moved and had to change providers, so I got a bundle at an introductory price, not much more than they would have charged me for internet alone. So I took it. I've watched almost nothing live. I did "catch up" on a show after weeks after it started. I think I could have done that without the TV package, too. So when my special offer expires and they try to double my rates it's going to be hard to justify the higher price.
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Rick, 11 Aug 2015 @ 5:32am

Seniors - Baby Boomers
They are also forgetting the Seniors who retire, who can no longer afford over $100 a month for a "TV" service that was free over the air when they were growing up. It's still free now - with an antenna. A Digital DVR is a couple of hundred, and can be programmed like a VCR. Free TV listings are available at TitanTV.
If Sling (Dish offering) could offer "speciality" channels (minus ESPN) for $1 a per channel you pick, it would take off must faster/higher. I don't like their current offering.
I have an HP Stream 200-010 Mini Desktop that goes for $178 (at amazon); a Windows 10 PC that can view any source from the internet that a regular PC can. Small form factor with HDMI & Display Port outputs with wireless & Ethernet ports.
In between that and Netflix DVD service, I can watch everything I want (but a year later for the DVDs to be released).
Savings: Over $1,000 per year...
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HaroldK, 11 Aug 2015 @ 6:16am

ESPN Programing
I have the forced ESPN package of channels. I never watch. Why? Because the programming sucks. Why pay for something you don't watch. I recently became a cord cutter.
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Anonymous Coward, 11 Aug 2015 @ 6:19am

In the uk and ireland you can buy cable tv,
basic entertainment channels,with no sports channels 20 euro approx per month.
And theres around 50 fta free channels on satellite .
buy dish and satellite reciever 50 euros approx.
IF you want to get the sports channel,s soccer ,rugby etc youll pay approx 50euro per month.
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- Anonymous Coward, 11 Aug 2015 @ 8:24am
  
  Re:
  But what about BBC-tax, installation, bundled items etc.? I can get it cheaper here in mainland Europe, but the secondary costs are more than killing the value.
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Anonymous Coward, 11 Aug 2015 @ 6:26am

Our new forced upon us plan doesn't include ESPN. After being required to have a cable box for each TV we had to choose which TV it would be and live with that. Went through hell getting the one channel we did want and that channel only offers certain movies on line at a per movie purchase price, and it isn't a premium movie channel at that. The phone is gone, the car is sitting waiting to be sold, I imagine cable TV and internet are next. We both hold full time jobs but work under the American corporate structure with no hope for a living wage. Thank heaven we haven't had any children. Once they kill off the middle class there will only be the wealthy remaining to purchase their products, so I really don't give a damn if they raise their prices and offer fewer options in the future. I don't care anymore. Just keep stock piling your profits corporate America, and see what that gets you.
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Anon, 11 Aug 2015 @ 6:49am

Political consequences?
Suppose fewer viewers watched Faux News, or the DemoPublican debates, or the various demagogues. Could we be facing a sudden outbreak of common sense?
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- Anonymous Coward, 11 Aug 2015 @ 9:08am
  
  Re: Political consequences? None, till political/social/economic collapse. Common sense: Never.
  As a life long resident of the U.S.A. I've watched the majority of the population become a lazy, obese, selfish, cowardly mob, more precisely anthropoid apes. They reject the responsibilities inherent in a democratic society. All they want is to pursue their lust, their lust for wealth, power, pleasure and blood. The leaders are simply the alpha beasts. The minority who recognize their responsibilities don't have the means to impact society. I, for one, am rather sorry for the situation, but must face facts. As for the future, there is no us in U.S. .
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  - Anonymous Coward, 11 Aug 2015 @ 11:01am
    
    Re: Re: Political consequences? None, till political/social/economic collapse. Common sense: Never.
    "watched the majority of the population become"
    
    Or ... you began to observe rather than ignore that which goes on - and there was little change in others, it was you that changed. It could happen.
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Ninja (profile), 11 Aug 2015 @ 7:10am

The solution is right there under their noses much like other cases. The telcos are afraid of Whatsapp and the likes so why not cut the voice channel and integrate it to hte data one and bring everything to the internet for very cheap prices? As for the cable, cut the bandwidth used to deliver the channels and offer higher speeds and streaming services for everybody. You know, do what Google did and treat the entertainment part as a separate entity from the internet one. People will still need the internet to stream. The possibilities are there. They just need to be tried.
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Anonymous Coward, 11 Aug 2015 @ 7:32am

Hearing the continuous press coverage of cord cutters, I feel sad for Aereo, it just missed the bus narrowly. What you call it bad karma!
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Rekrul, 11 Aug 2015 @ 11:16am

The only reason I still have a TV subscription is that it's literally cheaper to keep it than to get rid of it. As long as I keep the TV service, my internet service is grandfathered at a lower rate (although it recently went up $10). If I make any major changes to my plan, like getting rid of TV service, the price for internet service doubles, and the phone goes up as well.
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- Anonymous Coward, 11 Aug 2015 @ 3:29pm
  
  Re:
  Sounds like you need to switch to an ISP that isn't run by a Cable or Telephone provider.
  
  ...
  
  Yeah, that was a morbid joke.
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Anonymous Coward, 12 Aug 2015 @ 11:31am

11 Years Clean!
I cut the cord back in 2004, mostly because of trying to be a single mom raising 3 teenage girls....but now that they are grown and gone, I still won't be going back to cable.

I do, however, live off Netflix, Hulu (soon to be gone), and Google Play.

Sure, there are times I missed some things, and THAT was frustrating (severe weather alerts during tornado season)...but cord cutting did force the local stations to beef up their streaming video over the Internet during severe weather, which was nice.
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NOYB, 14 Aug 2015 @ 1:56pm

In 1983 - Cable was a bargain. First rate movies at a discount.
Hollywood's greed killed it.

No one in their right mind will pay these charges for 3rd tier movies.

And those efforts to kill most home recording? Taste the blowback. Keep it!
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Anonymous, 13 Sep 2015 @ 12:48pm

ESPN Content
Well, maybe ESPN should consider just being EF/BN, because the only content they display is Football and Baseball. So much for being a Sports Network...
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Jared (profile), 18 Nov 2015 @ 3:06am

Cord Cutting
cordcutinfo.com is a site devoted to cord cutting and if you feel as though anything should be added or disagree with anything leave a comment or contact the admin.
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