Cable TV Cord Cutting Continues To Set Records, Though Streaming TV Is Slowing Down Too

from the price-hikes-ahoy dept

For more than a decade, cable TV executives brushed aside the threat of cable TV "cord cutting" as either a nonexistent threat or a temporary phenomenon. Of course neither wound up being true, and consumer defections from the bloated, pricey traditional cable TV bundle continue to set records during the COVID crisis. Traditional cable TV providers saw a 6.2% drop in subscribers in the third quarter of 2021, an all time record. It's particularly bad for traditional satellite TV providers, who saw a 12% dip in overall users during the same quarter.

But it's not just traditional cable that's feeling the pinch. Growth in new streaming alternatives is also slowing down:

Growth slowed for virtual multichannel video programming distributors (MVPDs) in the third quarter of 2021, as the category added just under 1 million subscribers compared to 1.7 million new subscribers a year ago...Including the modest gains for the vMVPDs, total pay TV distribution was down 5.2% in the third quarter, the biggest drop since the 5.5% decline in the second quarter of 2020..."

While streaming alternatives are still doing well, and still pulling subscribers away from traditional cable TV, the slowdown has many causes. One being that traditional streaming increasingly mirrors the habits of the broader TV sector, with broadcasters driving a consistent drum beat of consumer price hikes without expanding service offerings or increasing value to the end user:

"Six years ago, everyone burst out of the gate with eye-popping low prices,” MoffettNathanson said in a report Tuesday (January 5). “That helped them get out of the gate, but it undermined their longer-term prospects in two ways."

The first issue was that the vMVPDs attracted price-sensitive consumers. The second issue is that the vMVPDs would have to their raise prices faster than traditional distributors as content companies increased their license fees.

The other driving factor is that younger generations just don't watch as much television overall, with time traditionally spent binge watching TV series instead going toward binge watching YouTube and TikTok. That's not to say that more traditional isn't popular. Newer streaming TV providers now have 14.2 million subscribers, and traditional TV is expected to still lay claim to 72.7 million subscribers by 2023, albeit down from 100.5 million subscribers one decade earlier.

Filed Under: cable tv, cord cutting, streaming, tv

MLB In Talks To Offer Streaming For All Teams' Home Games In-Market Even Without A Cable Subscription

from the home-run dept

Streaming options for professional and major college sports has long been a fascination of mine. That is in part because I'm both a fairly big fan of major sports and a fan of streaming over the wire instead of having cable television. My family cut the cord a couple of years back and hasn't looked back since, almost entirely satisfied with our decision. The one area of concern here continues to be being able to stream our local sports teams, as most of the pro sports leagues still have stupid local blackout rules. MLB.TV, the league's fantastic streaming service, has these rules too. While using a DNS proxy is trivially easy, easier would be the league coming to terms with modernity and ending the blackout rules. Notably, MLB did this in 2015 when it came specifically to Fox Sports broadcasts for 15 teams, but as I noted at the time:

But don't think for a single moment that that's where it ends. Even if MLB can't get similar deals in place for the other half of teams in the league, which would fully free up the fantastic MLB.TV product for local streaming, any modicum of success that Fox has with this program will be immediately adopted by the other broadcasters. They really don't have a choice. Cord-cutting isn't going away and it's been professional and college sports that have long kept subscribers tethered.

It took longer than I expected, but it's finally happening. Reports indicate that MLB is currently planning to rollout an all-league streaming option that would end local blackout rules entirely, even for cord-cutters. And, in case you thought this was going to be an MLB-only thing, its bringing the other major leagues along for the ride.

The web-based service — which could address a decades-old annoyance for baseball fans that some have partly blamed for the league’s steadily declining viewership — could launch as early as the 2023 season, a person with direct knowledge of the negotiations said.

The National Basketball Association and the National Hockey League are also considering partnering with MLB on the new streaming service, sources said. Insiders say subscription rates would vary by geographic market and could be between $10 and $20 a month — well below the monthly cost of most cable-TV packages, which can easily stretch past $100.

As you might imagine, the cable companies are not thrilled with this. After all, while cord-cutting has been a steady force in the American media landscape, the dam has yet to burst and that is almost certainly due to the appetite for live sports broadcasts that still sit behind complicated cable television deals these leagues have with broadcast partners. So how is this going to work?

Well, MLB is doing what I suggested almost a decade ago: making the streaming broadcast identical to the television broadcast and giving broadcast partners some of the revenue, while also giving the broadcast commercial advertisements the additional reach of the stream.

Sources said MLB Commissioner Rob Manfred could end up offering cable-TV giants a piece of the streaming revenue to compensate for potential subscriber losses. Manfred’s pitch is that cable TV won’t lose many subscribers, as MLB is mainly targeting younger customers who have already cut the cord, sources said. The cable companies don’t have streaming rights but could retaliate by paying less to broadcast games if they don’t like the bargain, sources said.

As for the teams, MLB’s streaming service would pay them based on viewership in their local markets. One MLB owner said the league has kept its owners appraised, and believes it has general support though no vote has been taken. Indeed, the MLB and team owners are concerned over dire forecasts for viewership. Roughly half of Americans will not be watching cable or satellite TV within a few years, according to Pew Research Center annual surveys.

There is no firm deal yet, as MLB is currently working with broadcast partners and its teams to finalize the plan. Sinclair Broadcasting is a major piece of gum in the works, because of course it is. Sinclair has the broadcast rights for nearly half the league's teams and is putting up a stink, though MLB's strategy appears to be repeatedly pointing out that Sinclair may be in such dire financial trouble such that it can't be trusted to continue operating far into the future.

At first, sources said Sinclair tried to persuade MLB to allow it to control the service for several years before handing the reins to MLB. But the league wasn’t having it, citing Sinclair’s financial condition and raising concerns that the company won’t be able to spend the money that’s needed for high-quality broadcasts, sources said.

In 2019, Sinclair’s Diamond Sports subsidiary paid $9.6 billion for the Fox Regional Sports Networks, since rebranded to Bally’s, giving it exclusive rights to the 14 MLB teams, 16 NBA teams, and 12 NHL teams. It borrowed a staggering $8 billion to fund the deal, sources said. Since then, Dish, Hulu and YouTube TV have stopped carrying the Bally’s RSNs, even as revenue from existing distribution deals has been slammed by cord cutting and subscriber declines. An August Moody’s Investors Service report found that Sinclair “now has an unsustainable capital structure given its very high leverage and weak liquidity.”

Don't threaten me with a good time, Sinclair.

Regardless, everything about these plans represents a massive step in the right direction. Sports leagues will be eyeing how this goes with great interest. When it goes well, as it almost certainly will, this could be the start of a massive change in how sporting events are consumed by the public.

And the end of cable television as we know it.

Filed Under: baseball, blackouts, cable tv, cord cutting, sports, streaming
Companies: mlb

Charter Spectrum Threatens To Ruin Potential Customers Over Debt They Don't Owe

from the class-act dept

There's a reason U.S. cable and broadband companies have some of the worst customer satisfaction ratings of any companies, in any industry in America. The one/two punch of lagging broadband competition and captured regulators generally mean there's little to no meaningful penalty for overcharging users, providing lackluster services and support, and generally just being an obnoxious ass.

Case in point: a new Charter (which operates under the Spectrum brand) marketing effort apparently involves threatening to ruin the credit scores of ex-customers unless they re-subscribe to the company's services. It basically begins with a letter that threatens ex-users that they'll be reported to debt collectors unless they sign up for service. It proceeds to inform them the letter is a "one-time courtesy" allowing them to sign up for cable or broadband service before the debt collector comes calling:

"A well-established credit history will more likely allow you to qualify for lower mortgage rates, better chances for obtaining credit cards and approvals for home rentals,” the letter says, suggesting that Schklair’s finances could be in serious trouble unless he returns to the Spectrum fold. "You have worked hard to build a great future for yourself and your family,” it says. “We look forward to welcoming you back.”

Maybe it’s just me, but that has a Sopranos-like ring of “You’ve made a nice life for yourself. Be a shame if something happened to it.”

The catch: the people being targeted with this latest dumb marketing ploy say they don't owe Spectrum any money:

"I asked if he owes Spectrum any money.

“No,” Schklair replied. “It’s been years since I was their customer, and they’ve never said anything about my not paying any bills.”

No notices of missed payments?

“No.”

No warnings about adverse reports to credit agencies?

“No, nothing like that.”

Leave it to a U.S. cable company to think up a marketing strategy that involves threatening the livelihoods of folks who don't actually owe it any money. My assumption is this kind of threat is levied heavily against lower-income communities where the constant fear of debt collection prods folks who may not even owe Spectrum to re-subscribe for fear of getting into trouble. Charter being Charter, of course, it tried to frame this as an "effort to reconnect":

"A Spectrum spokesperson confirmed the letter’s authenticity and called it “an opportunity to reconnect” with the cable company."

83 million Americans currently live under a broadband monopoly, usually Comcast and Charter. Between a lack of competition and captured regulators there's fairly consistently zero real repercussions for idiotic behavior like this, which is why historically things don't really change much. Increased competition in streaming TV has helped drive some improvements on that side of the coin, but the largely broken U.S. broadband market is a problem we don't seem intent on seriously addressing anytime soon--in part because we refuse to even acknowledge the core problem (monopolization and the corruption that protects it).

Filed Under: broadband, competition, cord cutting, debt collection, threats
Companies: charter spectrum

Another 1.2 Million Consumers Ditched Traditional Cable TV Last Quarter

from the evolutionary-inevitability dept

Surprising nobody, the traditional cable TV industry lost another 1.2 million paying subscribers last quarter as users flee to other alternatives. Largely those alternatives consist of streaming video services that are cheaper, more flexible, and feature better customer service. Many others are rediscovering free over the air broadcasts. Others have simply shifted away from TV entirely, choosing to embrace YouTube or TikTok.

According to Leichtman Research, the top cable companies lost 587,649 customers in just the last quarter, compared to 698,000 for telco and satellite providers. Over the last year, traditional pay TV providers saw a net loss of about 4,520,000 subscribers, compared to a loss of about 5,460,000 over the year prior (impressive for a trend that the industry spent years pretending wasn't actually happening). Fortunately for the industry, the cord cutting revolution appears to be slowing somewhat:

"Pay-TV net losses of 1,230,000 in 2Q 2021 were about 275,000 fewer than in 2Q 2020 on a pro forma basis,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. “Over the past year, top pay-TV providers had a net loss of about 4,520,000 subscribers, compared to a loss of about 5,460,000 over the prior year."

While the rate of decline is slowing there's still a lot of room to fall. The top traditional pay TV providers still serve roughly 77.6 million subscribers in the US, many of which stick around thanks to sports programming. As sports increasingly shifts away from traditional cable providers and toward streaming alternatives you can expect subscriber counts to follow suit.

Users continue to flee traditional cable for the usual reasons: high prices, terrible customer service, and bloated and inflexible cable channel bundles. There continues to be some headway in these arena by entrenched cable TV providers, but there's a contingent of execs that simply refuse to seriously compete on price. In large part because many of these companies (Comcast) enjoy regional monopolies over broadband access, allowing them to squeeze those subscribers tighter than ever with bizarre fees and broadband usage caps and surcharges.

Meanwhile increased competition in the streaming TV space has also made things a bit rougher on sector leader Netflix as well, which has been bleeding subscribers in both the US and Canada thanks to growing new entrants like Disney Plus. All in all the shift away from dominant cable TV providers toward more flexible, cheaper alternatives and actual competition (instead of the "wink wink, nod nod" non-price competition we saw between satellite TV and traditional cable TV for years) continues to be a great thing.

Filed Under: cable, cable tv, cord cutting, internet, pay tv, streaming

Dish, Cornerstone Of The Trump DOJ's 'Fix' For The T-Mobile Merger, Continues To Bleed Wireless, TV Subscribers

from the this-is-going-well dept

If you recall, economists repeatedly warned the $26 billion Sprint/T-Mobile merger would kill jobs, harm competition, and ultimately raise prices for consumers. To "fix" the problem, the Trump DOJ and FCC concocted an elaborate and cumbersome plan to create a replacement fourth wireless carrier out of Dish Network, despite the company's lack of experience in the sector and history of empty promises. So far none of this is going particularly well, with 5,000 and counting lost jobs, Dish and T-Mobile clearly unable to get along, and Dish... the cornerstone of the entire plan... continuing to bleed both TV and wireless subscribers.

Of all the pay TV providers dealing with "cord cutting," Dish has indisputably been hit the hardest, losing another 67,000 pay TV subscribers last quarter. It technically added 65,000 Sling TV streaming video subscribers, but it wasn't enough to offset the 132,000 customers that cancelled Dish's traditional satellite TV service. With absolutely no plans to build new satellites and users shifting increasingly to streaming, Dish knows satellite TV is a dead end.

That's where the company's wireless business is supposed to come in.

As part of the DOJ/FCC deal, Dish obtained billions in spectrum and the Boost prepaid mobile brand from Sprint. The idea is that Dish is supposed to operate a Mobile Virtual Network Operator (MVNO) as it builds out its own, full 5G wireless network.

But, there too, things aren't going particularly well. Dish lost 201,000 Boost subscribers in the last quarter. And while it added 200,000 subscribers last March by buying a small wireless company named Republic Wireless, a research note by Wall Street analyst Craig Moffett indicates the overall trajectory isn't a great one:

"Their Q2 loss of 201K wireless subscribers (about 2.3% of their Q1-ending subscriber base, or almost exactly the size of Republic Wireless) means that they have now organically lost 9.7% of their subscribers in their first year of ownership."

The Trump DOJ and FCC "fix" for the Sprint T-Mobile merger was always a bit dodgy. It was hand-crafted by a DOJ "antitrust enforcer" in Makan Delrahim who was completely disinterested in data showing the deal should be blocked. Delrahim was far more interested in working as a glorified life coach for Sprint, T-Mobile, and Dish executives looking for regulatory approval. The deal itself always felt like flimsy theatrical cover to justify rubber stamping the Sprint T-Mobile deal, instead of a real fix for any genuine problems.

Now the whole mess is in the lap of the Biden DOJ, who this week sent a letter to Dish urging Dish and T-Mobile to start getting along. The DOJ is particularly concerned about the fact that T-Mobile's shutdown of its 3G CDMA network could leave millions of Boost mobile customers stranded January 1. Dish says the shutdown was earlier than promised, violating merger guidelines. T-Mobile says Dish is simply being too cheap to give Boost users discounted 4G or 5G phones. Either way, the DOJ isn't impressed:

"After careful consideration of the Parties’ submissions and arguments, the Division is left with grave concerns about the potential for a nationwide CDMA shutdown to leave a substantial proportion of Boost’s customers without service. While it cannot reach any conclusions today regarding events that have not yet transpired, the Division believes that the Final Judgment may be violated by one or both Parties if the network shutdown strands a substantial proportion of Boost customers, particularly if either or both Parties have not taken all appropriate steps to affirmatively alleviate any such harms in the leadup to implementing the network shutdown. If that situation manifests—and we sincerely hope that it does not—the Division may act pursuant to its authority under the Final Judgment or seek relief from the Court against one or both Defendants."

But again, the real problem is this deal was always a stupid, unworkable mess from the get go. Numerous experts noted so, and they were all ignored. Largely because the deal provided useful if flimsy cover for merger approval, which is all that really mattered.

To make any of this work Dish, a company with no real experience in the sector it's trying to disrupt, needs to remain financially viable as it attempts to meet guidelines attached to its deal with the DOJ and FCC (providing wireless to 70% of the country by 2025). But Dish is a company with a long history of empty promises in wireless (just ask T-Mobile circa 2018), run by a guy (Charlie Ergen) people traditionally say is hard to work both for and with, purportedly building a new wireless network whose details remain hard to come by.

l still tend to think it seems entirely possible Dish strings feckless U.S. regulators along for years then, once the six year restriction on selling its spectrum expires, cashes out, hoovers up billions of dollars, then throws a relative pittance at any remaining legal or regulatory penalties. The U.S. wireless sector gets even more consolidated, and all the folks who pushed this dodgy fix for a bad deal (that should have been rejected outright) simply forget any of this ever happened.

Filed Under: broadband, competition, cord cutting, doj, fcc, tv, wireless
Companies: dish, sprint, t-mobile

Cable's Broadband Monopoly Continues To Protect It From TV Cord Cutting

from the do-not-pass-go,-do-not-collect-$200 dept

One of the nice things about being a telecom giant in a country with limited competition, feckless politicians and hog-tied regulators is there isn't much in the way of accountability. As a major broadband provider like Charter or Comcast, you're allowed to monopolize the telecom market, jack up prices, elbow out competitors, then lobby state and federal government to ensure nobody does anything about it. Hell, thanks to a timid press that can't call a spade a spade, half the time nobody can even be bothered to point out that you're a monopoly in the first place.

In US telecom, regional monopolies like Charter and Comcast continue to dominate market share as residential telcos effectively retreat from network expansion in any areas that aren't profitable enough, quickly enough for Wall Street's liking. Unfortunately for them, they still have to deal with rising competition on the video end of their businesses.

But as the pay TV sector gets more competitive thanks to streaming, these telecom monopolies can simply extract their pound of flesh from captive broadband customers. Charter Communications, (which operates under the brand name Spectrum), lost another 156,000 residential pay TV subscribers in the first quarter, a notable uptick from the 70,000 pay TV subscribers lost during the same quarter a year ago. The reasons aren't mysterious: users are fleeing endless price hikes and some of the worst customer service in America for the cheaper, more flexible, more consumer friendly TV offerings of streaming operators.

Cable companies' broadband customers would be doing the same thing but they can't because there are no other options to flee to. This is then interpreted by cable executives as something caused by their own innate business genius:

"We continue to execute well in a market environment that has not yet returned to normal. We added 355,000 Internet customers in the first quarter, and 2 million over the last year, for year-over-year growth of 7.3 percent."He added: "Our value-driven operating strategy of providing multiple high-quality products at lower prices than sold individually continues to drive our growth."

Of course as we've long noted, broadband monopolization does give telecom giants like AT&T, Charter, or Comcast competitive leverage in the streaming space. They impose arbitrary and confusing usage caps and bandwidth overage fees (which are utterly unnecessary for any technical reason), then exempt their own content from those caps while still penalizing competitors like Netflix. That makes it cheaper for a consumer to use a telecom giant's streaming services, but results in all manner of added fees for consumers should they dare wander outside the gatekeeper complex.

Unlike AT&T and Comcast (which have both done this for years) Charter's technically forbidden from imposing caps right now thanks to conditions affixed to its merger with Time Warner Cable. But those conditions expire soon. And while some new state laws ban such behavior, the federal government during the Trump administration thought lobotomizing itself at monopolies' behest made better sense than doing absolutely anything about anticompetitive problems like this, or the myriad of other problems created by mindless sector consolidation and regional broadband monopolization.

Filed Under: broadband, competition, cord cutting

NFL's Thursday Night Football Goes Exclusive To Amazon Prime Video

from the b-as-in-billion dept

While denialism over cord-cutting is still somewhat a thing, a vastly larger segment of the public can finally see the writing on the wall. While the cable industry's first brave tactic in dealing with the cord-cutting issue was to boldly pretend as though it didn't exist, industry executives more recently realize that there is a bloodbath coming its way. There are few roadblocks that remain for a full on tsunami of cord-cutters and one of the most significant of those is still live sports broadcasting. This, of course, is something I've been screaming about on this site for years: the moment that people don't need to rely on cable television to follow their favorite sports teams live, cable will lose an insane number of subscribers.

Over the past few years, the major American sports leagues have certainly inched in that direction. Notable for this post, 2017 saw the NFL ink a new streaming deal for mobile streaming with Verizon. The NFL had a long partnership with Verizon for mobile streaming already, but the notable aspect of the new deal was that NFL game streaming was suddenly not exclusive. Other streaming services could get in the game. And, while you can't draw a direct line to it, the tangential story of how the NFL just inked an exclusive deal with Amazon Prime for the broadcast rights for Thursday Night Football certainly shows you where this is all heading.

The deal runs from 2023 to 2033 and, according to a report from CNBC, will see Amazon pay $1 billion per year for the TNF package. Thursday Night Football is the NFL's newest and cheapest TV package, but the deal lets Amazon creep closer to parity with the NFL's other licensees, mainstream TV networks like Fox Sports, ABC/ESPN (Disney), CBS (Viacom), and NBC (Comcast). CNBC's report has the other four channels paying upward of $2 billion per year each, and unlike Amazon, the TV networks get to take turns airing the Super Bowl.

The exclusivity for Amazon seems like a mistake for the NFL, which really should want its product viewed in as many places as possible. On the other hand: 1 billion dollars a year. The Thursday lineups are typically one or two games each Thursday, far less than the deals for Sunday games. It's an incredible amount of money to pay just so Amazon can exclusively show the NFL's worst games of the week. But it also shows not only that Amazon understands the power and draw of live sports like this, but also that the NFL understands the power and draw of streaming services.

Building on that point, the NFL is also loosening up what its other broadcast partners can do in terms of streaming games.

The NFL's new deal contains streaming provisions for the other providers, too. Each network can now simulcast their games on their streaming service, and some deals scored one or two streaming-exclusive games. Disney's ABC and ESPN games are also allowed on ESPN+, and ESPN+ will get one exclusive game per season, the London "International Series" game. NBC games can also appear on the streaming service Peacock, and Peacock is getting "an exclusive feed of a select number of NFL games." CBS can stream games on Paramount+. Fox Sports, which wasn't part of Disney's acquisition of Fox, apparently has a streaming service called "Tubi," which can now simulcast the Fox games.

All of which is to say that the NFL is widely opening up its games to be streamed in more and more places. This shouldn't come as the world's biggest surprise, frankly. The NFL is a money-making operation and it does its marketing and promotional work better than most leagues. The very smart people handling broadcast contracts for the league certainly can see where the future in broadcasting games is and it sure looks like they are only going further and further into streaming.

If pro sports leagues follow suit, the end of cable television as we know it is nigh.

Filed Under: amazon prime video, cord cutting, football, live sports, sports, streaming, thursday night football
Companies: amazon, nfl

AT&T Is Sad Because Nobody Wants To Overpay For DirecTV

from the synergies,-yo dept

U.S. Telecom providers, as companies that have spent the better part of the last century as government-pampered monopolies, are adorable when they try to innovate or seriously compete in more normal, competitive markets. Verizon's attempt to pivot from curmudgeonly old phone company to sexy new ad media darling, for example, has been a cavalcade of clumsy errors, missteps, and wasted money.

AT&T has seen similar issues. Under CEO Randall Stephenson, AT&T spent roughly $200 billion on mergers with DirecTV and Time Warner, hoping this would secure its ability to dominate the pay TV space through brute force. But the exact opposite happened. Saddled with so much debt from the deal, AT&T passed on annoying price hikes to its consumers. It also embraced a branding strategy so damn confusing -- with so many different product names -- it even confused its own employees.

As a result, AT&T lost 3,190,000 pay TV subscribers last year alone and roughly 7 million since 2017. Not exactly the kind of "domination" the company envisioned. Despite a $42 billion tax break from the Trump administration for literally doing less than nothing (42,000 layoffs, in fact), AT&T's now being forced to consider low ball offers for DirecTV after investors finally got tired of the company's merger-mania. It's not going particularly well:

"AT&T’s attempt to unload ­DirecTV has been thrown into doubt, as the telecom giant has signaled it’s unhappy with the offers it has received for the struggling satellite TV service, The Post has learned...insiders tell The Post that AT&T — dissatisfied with those offers — has invited private equity giant TPG Capital to study the books in hopes that it will make a binding offer that props up the price.

Other participants include Apollo Global Management, which, according to sources, offered less than $15 billion including debt; and investing tycoon Michael Klein’s blank-check company Churchill Capital Corp. IV.

More to the point: AT&T paid $66 billion just five years ago for DirecTV, and now it can barely net $15 billion for the assets. Everybody from consumer advocates to Wall Street stock jocks thought it was stupid that AT&T bought a satellite TV provider on the eve of the cord cutting and streaming revolution. While AT&T did get to enjoy slightly less competition from traditional TV providers via the acquisition, it's hard to argue the deal was anything other than a disastrous dud.

And while the acquisition may have proven stupid and pointless, the debt from both the DirecTV and Time Warner deals persists. And it's not AT&T executives that have to pay for it. It's the company's consumers, who've faced a steady parade of rate hikes. And the company's competitors, who face higher rates for content than ever. And it's the company's employees, 47,000 of whom have been fired since 2017 despite AT&T nabbing a $42 billion Trump tax cut and billions more in regulatory favors from the FCC.

Of course this was all spelled out very clearly by economists, consumer groups, and other experts, but the FCC, DOJ, and U.S. courts couldn't have possibly cared less. Especially when it comes to the Time Warner merger, which saw absolutely zero conditions affixed to the deal. When we talk about the U.S. having flimsy and pathetic antitrust scrutiny and a relentless obsession with idiotic, "growth for growth's sake" mergers, AT&T's last five years remains exhibit A. instead of promised innovation, we got rate hikes and layoffs. And the next time AT&T proposes a merger, folks will pretend none of this ever happened.

Filed Under: competition, cord cutting, pay tv, tv
Companies: at&t, directv, time warner

Cable TV Execs Move Past Denial Stage, Now Fully Expect A 'Cord Cutting' Bloodbath

from the you-made-this dept

For the better part of the last decade, cable and broadcast executives tried their hardest to pretend that their industry wasn't facing a massive tectonic shift. First, they tried to insist that users flocking from expensive bloated cable bundles to streaming or over the air broadcasts didn't actually exist. Then, when it became very clear cord cutting was a major trend, they tried to pretend it was just something irrelevant, poor nobodies did. Then, when evidence made it very clear that wasn't true either, many executives pretended they'd seen this coming all along.

They didn't see it coming. In fact they routinely doubled down on all the kinds of behaviors that created the problem in the first place, like mindless rate hikes, bullshit fees, cheaping out on customer service, and fixating on megamergers instead of customer welfare. But after 2019 and 2020 wound up being the bloodiest years on record for cord cutting, they sure as hell see it now.

Case in point: industry insiders now expect 25 million U.S. households to cancel their pay-TV service over the next five years. That's on top of the 25 million homes that have already cut the cord since 2012. The hope now is that the trend stabilizes somewhere around the 50 million traditional TV subscriber mark. Granted there's no evidence they'll be right about this either, and either way there are some hard times in store for the sector all the same:

"At least three major media companies now expect pay-TV subscriptions to stabilize around 50 million, according to people familiar with the matter, who declined to speak on the record because their company plans are private.

The projected decline in subscribers will mean a drop of about $25 billion in cable subscription revenue plus associated advertising losses for the largest U.S. media companies, including Disney, Comcast’s NBCUniversal, AT&T’s WarnerMedia, ViacomCBS, Fox, Discovery, Sinclair and AMC Networks."

Facing the one-two punch of this massive paradigm shift and the COVID crisis (which has made consumers even more sensitive to relentless cable TV price hikes), Disney just completely retooled its business operations to focus exclusively on streaming.

Traditional TV/telecom executives, which, from experience, tend to surround themselves with more yes men, have had a harder time adjusting. Charter (Spectrum) CEO Tom Rutledge, for example, spent much of last year insisting that cord cutting would slow down this year as his company doubled down on relentless bi-annual consumer price hikes. His predictions were... unsound.

Of course just because people are flocking to streaming doesn't mean that new sector problems won't rise to replace the old ones. Giants like AT&T, Verizon, Comcast, Charter, and others will simply exploit their broadband monopolies to recoup any lost TV revenue by jacking up the cost of broadband. And as hardware vendors, broadcasters, telecoms, and other companies all begin to elbow each other on their mad dash to the streaming trough, new, yet somehow familiar gatekeeper warfare problems will arise. Still, with streaming offering more flexible options, lower costs, and better customer service, it's hard not to think the increased competition won't be a net positive once the dust starts to finally settle.

Filed Under: cord cutting

Wall Street: Traditional Cable TV Sector 'Unraveling' In Wake Of Covid

from the adapt-or-perish dept

While COVID-19 has been great for some sectors (like video games or webcams), it's beating traditional entertainment options (like brick and mortar movie theaters and cable TV subscriptions) to a pulp. To the point where Wall Street analyst Craig Moffett has declared that the traditional cable TV sector is unraveling thanks to a sharp spike in cord cutting. Recent data suggests that traditional pay TV subscriptions have dropped 22.8% from its peak back in 2014. And by the end of 2024, analysts expect that fewer than half of US homes will subscribe to a traditional pay TV service.

A need to cut household costs, fewer live sports, obnoxious price gouging, and lousy customer service have all fused into a much worse problem, proclaims Moffett:

"According to Moffett’s estimates, pay TV subscribers fell 7.7% in Q2 (8.3% if pandemic-related nonpay customers are excluded), the worst ever for the sector. And it comes after eight consecutive quarters of worst-ever losses. That forebodes a scary trend for the business.

“At this rate of decline (somewhere between 7.7% and 8.3% per year), the traditional pay TV business would disappear entirely in another 12 years,” Moffett wrote, adding that just two years ago, the rate of decline was 3.3% while last year fell at a 5.4% clip.

“The pay TV ecosystem is well and truly unraveling,” Moffett wrote.

Fairly amazing for a trend the industry (including Moffett) spent years either downplaying or denying entirely. Cable executives had recently been trying to claim the trend would soon be reversing itself, a bit of prognostication that's not looking so hot.

To be clear, giants like AT&T and Comcast will be fine. They enjoy major broadcast empires and vast monopolies over broadband, allowing them to counter these losses by jacking up the cost of broadband service with little to no market or regulatory repercussion. But if they want to continue making any meaningful money off of television, they're going to have to finally do things like seriously compete on price (gasp) and actually investing in customer service (streaming alternatives routinely score far higher on customer satisfaction due to better service, lower prices, and greater flexibility).

Actually trying on this front means not socking consumers with cable TV bills that are packed with so many bogus fees, your total due can be up to 45% higher than the company's advertised rate. Actually trying means genuinely investing in customer service instead of routinely offshoring support to substandard subcontracted services. These are changes the industry could have embraced years ago, but it's abundantly clear many executives believed that the traditional cable TV cash cow was going to live forever. Now, due to decades of denial, the mad scramble from behind the eight ball begins.

Filed Under: cable tv, cord cutting, covid