Cable Company CEO Calls TV Business A 'Tragedy Of The Commons' That Ends Badly

from the mass-seppuku dept

While larger cable companies have the scale and leverage necessary to negotiate better programming, smaller cable companies are finding themselves facing tighter and tighter margins as broadcasters push for relentless programming increases. As such, many have begun candidly talking about exiting the pay TV sector entirely and focusing on broadband service only. When approached by broadcasters like Viacom about major hikes, some cable operators have simply culled the channels from their lineup permanently and refused to look back.

Not too surprisingly, the narratives being told by these smaller cable companies vary differently from larger cable operators, many of which deny that pay TV is caught in an unsustainable death spiral thanks in part to relentless broadcaster demands. CableOne CEO Thomas Might, for example, candidly declared last week that the traditional cable sector is a "tragedy of the commons" that's going to end badly for everyone involved:

"The actions of content owners is easily explained by the concept of tragedy of the commons. Once one programmer started taking double-digit rate increases, even in the face of falling ratings, each of the other programming groups felt compelled to do the same. The reason the theory is named "tragedy" is because it is guaranteed to end badly for all in the long run. It appears that long run is finally arriving."

And again, while large cable operators and broadcasters have denied cord cutting's very existence -- and downplay "cord shaving" (reducing your cable packages or opting for a skinny bundle) at every opportunity, Might states the obvious in noting the kids just aren't watching regular TV anymore:

"Linear video ratings are plummeting for several reasons. The lower end of the market can no longer afford the big bundle; the number of disruptive OTT technologies and vendors are now multiplying rapidly; and the millennial generation has very limited interest in traditional TV viewing. These patterns will inevitably bring an end to the ubiquitous fat bundle, but only slowly and painfully."

As we've long noted, cable operators could pretty easily defeat cord cutting by competing on price and value. But instead their solution so far has been to raise rates on broadband and TV like it's going out of style, to impose usage caps to punish cord cutting, and to offer "skinny bundle" packages that give the illusion of value, but saddle users with misleading fees post sale. Only when cord cutting shifts from a trickle to a steady roar will most major cable executives finally change tack, at which point they'll be surrounded by an ocean of hungrier, leaner companies all doing what cable refused to do for a generation: offer a cheaper, more flexible pay TV product.

Filed Under: cable tv, thomas might, tv
Companies: cableone