from the head-in-sand dept
After a record-setting second quarter for cord cutting, the cable industry seemed prepared to accept cord cutting (and as a result embrace new, skinny bundles of channels and the reality that it may actually have to someday compete on price). But subscriber TV losses during the third quarter sucked slightly less than normal. That, in turn, fueled a new industry press meme about how Internet video's threat to cable was "overblown," cable has "struck back" and it's time to "change the narrative," because cable, like, has things totally under control now:
"It’s time to change the narrative about cord cutting,” Craig Moffett, an analyst at MoffettNathanson LLC, said Thursday in a note titled “Charter Q3 Earnings: Cable Strikes Back.” “Yes, the pay-TV industry is slowly drip, drip, drip declining,” he said. “That cable was actually holding its own was at best a secondary narrative."...The third-quarter resurgence after a disastrous summer quarter of record subscriber losses was led by Comcast, the nation’s largest broadband Internet service provider."So what did Comcast do to encourage this suddenly rosy outlook among many stock jocks? Why the country's least liked company lost just 48,000 subscribers last quarter. That's still notably pathetic, but it excited Wall Street because it was Comcast's best subscriber showing in nine years (which again, speaks volumes). Time Warner Cable saw similar "improvement," losing just 7,000 subscribers last quarter. Other third quarter earnings results were all over the board, from AT&T's loss of 92,000 U-Verse subscribers (great job!) to Charter managing to add a whopping 12,000 video subscribers (wow!).
And while this narrative of cable "striking back" and cord cutting being a hallucination of a few, mean 'ole bloggers is a great one for firms pushing specific stock positions, news outlets and analysts nervously sucking at the teat of dwindling industry ad money, or executives with their heads buried deeply in the sand, it misses the forest for the trees.
One, many of these companies just finished new gee-whiz set top box GUI upgrades (notably Charter, Time Warner Cable and Comcast). And while some graphical upgrades for the aging cable box may have excited customers temporarily, they're in no way going to be a substitute for the direction the cable industry absolutely needs to head: lower prices and more flexible channel packages. Netflix is now in half of all american homes and the impact on cable ratings has been abundantly obvious. And while several cable companies are finally experimenting with new "skinny" channel bundles, they're still not seriously competing on price. As a result these offerings tend to lack value, features, and, in cable industry fashion, are jam packed with fees and caveats.
A slightly less shitty quarter also doesn't change the fact that the housing market continues to grow without bringing new cable subscribers along for the ride. Nor do these numbers address the arguably bigger threat of "cord shavers," an admittedly idiotic term that includes users who are trimming back on their cable TV and service bundles to counter absurd programming rate hikes. Flat cord cutting numbers are just one metric to look at. Looking at all of the data, including ratings, housing growth, and cord shaving paints a very clear picture that Internet video is a serious threat that's not going away.
To be sure, much cord-cutting analysis and press coverage tends toward the apocalyptic, and over-states both the pace and scale of the problem. It's also true that cable could likely swat cord cutting like a pesky fly were the industry interested in things like actual innovation, competing on price, and disruptive new, open viewing platforms and hardware. But it's pretty abundantly clear looking at consumer bills and customer satisfaction surveys that the industry is interested in none of those things. Claims that one slightly-less-shitty quarter for a single statistic means the tide is turning sends the completely wrong message to an industry that needs to wake up and engage in aggressive adaptation before things get truly ugly.