A Blog by Jonathan Low

 

Oct 31, 2020

Cable TV Execs Finally Move Past Denial, Expect Pandemic Cord-Cut Bloodbath

Having evidently learned nothing from previously fruitless entertainment industry opposition to new technologies, cable tv execs were in denial about cord-cutting. 

The pandemic-accelerated cancellations may have finally shaken them out of that delusional state. JL

Karl Bode reports in TechDirt:

The COVID crisis has made consumers even more sensitive to relentless cable TV price hikes. Insiders expect 25 million U.S. households to cancel their pay-TV service over the next five years on top ,of the 25 million homes that have cut the cord since 2012. They doubled down on all the 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.

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.

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