Cord-cutting: Cable channels hit on subscriber losses

“The latest round of earnings from major media companies is stoking fears that as more consumers drop their traditional pay-TV services, the long-term health of the industry’s biggest players will be threatened,” Joe Flint and Shalini Ramachandran report for The Wall Street Journal. “The growing unease about the state of the pay-television ecosystem was on display Wednesday, as media stocks were battered.”

“The share price of programming behemoth Time Warner Inc., which posted only modest 2% cable subscription fee growth in the second quarter, fell 9% in trading. Shares of Discovery Communications Inc. plunged 12%, even as the company highlighted its efforts to secure higher fees in what it called a U.S. TV market that remains ‘challenged.’ Meanwhile, shares of 21st Century Fox and Viacom Inc. fell 7% and 7.5%, respectively, on Wednesday before the companies reported their own earnings results,” Flint and Ramachandran report. “But the biggest impetus for the broad selloff, according to analysts, was Walt Disney Co., which late Tuesday cut its earnings growth target for its cable business. A conference call with analysts then morphed into a vehement defense of ESPN by Disney executives, as the network experiences ‘some subscriber losses’ due to cord-cutting and cheaper ‘skinny’ packages of channels. Disney shares declined 9.2% Wednesday.”

“Any concerns about the future health of ESPN—one of the most expensive channels, thanks to its live, must-have sports—are sure to spook investors,” Flint and Ramachandran report. “Many consumers, particularly millennials, are opting for online platforms such as Netflix, Hulu, Amazon and Apple TV over a traditional cable or satellite subscription. That, in turn, is hurting traditional distributors and programmers.”

Read more in the full article here.

MacDailyNews Take: Hopefully, this pressure provides the necessary impetus for Apple to finally get deals inked for their over-the-top Internet TV endeavor. Especially in time for this year’s holiday shopping season. New Apple TVs plus an “Apple Television” service would be well-timed in light of traditional Pay-TV’s declining situation.

SEE ALSO:
Apple to unveil next-gen Apple TV in September, sources say – July 30, 2015
Apple TV delay crushes Akamai stock – July 28, 2015
US judge delivers potential landmark ruling, says Internet TV should be treated like cable – July 17, 2015
Apple Internet TV potentially worth billions to the bottom line – July 15, 2015
Apple close to over-the-top TV deal with networks – July 14, 2015
CBS CEO: We’re still in negotiations with Apple over new Internet TV service – May 27, 2015
Time Warner CEO ‘pretty confident’ Apple will launch Internet TV service soon – April 29, 2015
Disney presses Apple to carry more channels on forthcoming Internet TV service – April 8, 2015
Apple asks TV programmers to supply their own streams for proposed Internet TV service – April 1, 2015

20 Comments

  1. Shares of Discovery Communications Inc. plunged 12%, even as the company highlighted its efforts to secure higher fees in what it called a U.S. TV market that remains ‘challenged.’

    It is interesting that Discovery is blaming the U.S. TV market as being “challenged.” Apparently they think the U.S. TV market needs to correct itself and accept higher fees like baby birds open wide and take anything their mother shoves down its throat.

  2. The cable companies are starting to suffer the “AOL Effect” when people realized they had other options and the stupendous greed was killing their golden goose. I hardly watch TV and I got Time Warner, Netflix, Amazon Prime and HBO NOW. How stupid am I?

    I look forward to cutting my bill in half or more but I’m not really hopeful They’ll figure out a way for ala carte to cost the same for less.

  3. I cut the cord over 7 years ago and have never been happier. I have Charter for internet, a Ruku box and I only subscribe to Hulu Plus and Sling TV. There are plenty of local new channels on the internet that I can see live when I want. With Sling TV I can watch ESPN and ESPN 2.

  4. To DirecTV, Dish, Comcast, TimeWarner, et al:
    You’re not the only game in town anymore. The days of consumers being stuck with paying you $80-100/mo to get the content they want (along with a bunch of crap they don’t want) are numbered. BTW, you’re not much more than a dumb pipe. Get over it.

    Network/Content owners:
    You create the content. People – not wholesale distributors – are your ultimate customers. Ultimately, we pay the bills, so treating us like we’re not important. Let us choose where to buy and consume your content. DO NOT force us to work with a middleman of your selection. Let us get your content from the company of our choosing, so that means you need to work with everybody – including Apple. If you don’t, you’ll be doing so at your own peril.

      1. Content is created largely because someone feels it needs to be expressed. The format drives the kind of story told, but the creators seek to make some money for their efforts. Advertisers are unnecessary as cable TV has shown. For years, many cable stations had no ads, because the consumer paid directly for content. Internet streaming companies work the same way today – Hulu, Netflix, et al. People pay for content, whether it is original content like House of Cards, or for movies/TV shows made by others. We are seeing the customer wrenching back financial control of their lives and wanting to pay for things that interest them and not pay for things they hate. Books are like box-office movies are like internet streaming services. They have all become commodities.

      2. I’m not oversimplifying anything. Content DOES NOT exist to deliver eyeballs to advertisers. I don’t even know where you’d get such an inane idea. In the age of broadcast TV, the content producers (networks) needed advertisers; it was the only way to fund production. That’s no longer the case.

        As Poster so eloquently put, content existed long before advertising. Content producers want to make content, and many would prefer to make money making said content. That money can come three different ways:

        1) From advertisers who support the content production and distribution entirely so it’s free to consumers

        2) From advertisers and from consumers both paying a portion. This is cable and satellite.

        3) From consumers who pay for it directly. This is the model on which Internet streaming could be based, for instance if you pay HBO to watch HBO.

        1 and 2 are the old way. 3 is the new way. Before internet streaming, there wasn’t a good or timely way to consume content directly from content producers. Now there is. With this model, distributors like cable and satellite and advertisers both become less relevant.

        Advertisers now need content producers to get their message out, not the other way around. The biggest reason is that content producers can connect directly with consumers. They no longer need the middle man. If Scripps or HBO or some small studio wants to offer their content directly to me, then can.

        It’s a new world.

  5. >modest 2% cable subscription fee growth in the second quarter<

    And even that growth was probably from mandating that everyone use a cable box, even when one is not needed.

  6. I have a cable box for basic channels that comes along with my Internet package. The box is sitting in a closet. I use an antenna for better picture quality and an AppleTV for any services that I want.

    As with Uber, consumers are choosing new business models for services that cuts out the middleman.

    1. Spelling police;
      apocalyptic maybe?
      a•poc•a•lyp•tic (ə-pŏkˌə-lĭpˈtĭk)►
      adj. Of or relating to an apocalypse.
      adj. Involving or portending widespread devastation or ultimate doom: “now speaks in apocalyptic terms about the probable conflict ahead” ( Financial Times).
      adj. Characterized by usually exaggerated predictions of or allusions to a disastrous outcome: “Stripped of its apocalyptic tone, what this amounts to is an advocacy of teaching names, dates and places by rote” ( Stefan Kanfer).

  7. The biggest issue I have now that I cut the cord is OTA signal quality. I live in an apt receive spotting reception. I have tried several antennas. But my window just faces in the worse possible direction and I am on a low floor.

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