Cable companies hurt by fleeing video customers
The drop in business contributed to a decline in profit for Cablevision and Time Warner Cable.
Both are suffering from a loss of video subscribers.
This is a touchy subject for the industry. In fact, the mere mention of "cutting the cord" gets a brusque dismissal from executives. They'll blame a down economy. They'll blame competition from other pay-TV services. But the idea that people can get all the video they need from Netflix (NFLX), Redbox and the rest of the Internet? Simply ludicrous.
At any rate, it's looking like the dwindling of video subscribers is becoming more than a trend. Cablevision saw its third-quarter profit dive 65% as video customers fled. The company reported only 14 cents a share in profit, far below the 31 to 32 cents a share that analysts were expecting. At least revenue was on par with what analysts expected, at $1.67 billion.
The glaring problem for the company was that it lost 19,000 video customers from the previous quarter. At least the company gained 17,000 high-speed Internet customers and 38,000 voice subscribers, but they don't pay as much as the cable folks.
Cablevision shares got whacked on the news, plunging 13% to $15. The stock has now erased all gains it had made year to date.
Time Warner Cable lost 128,000 video subscribers in the quarter but gained 89,000 high-speed Internet customers. It reported $1.08-a-share in profit -- below the $1.13 per share that analysts were looking for.
Time Warner shares were down more than 3% Friday to under $63. Shares are down about 6% year to date.
The industry will be watching closely when Comcast (CMCSA) releases its earnings next week.
There's no question the economy has taken a bite out of video subscribers. New-home sales -- previously a lifeline for the business -- slowed to unimaginable levels and are only now starting to recover. And people are much more likely to give up cable than Internet when cutting expenses.
But how many of those customers are gone for good? As the Internet provides more and more alternatives to cable, how can the industry rein in defections?
"Programming costs are rising faster than video revenues," Sanford C. Bernstein, an analyst Craig Moffett, told The Wall Street Journal. "Unless there's growth somewhere else in the business model, you've got the worst of all worlds: a slow- or no-growing business with lower margins."
Overpriced product, poor customer service, unwilling to listen to customers input. Gosh makes you want to put up an antenna.
I am getting tired of paying to see commercials, channels that try to sell me jewelry, how to cook food, and spanish station. The cost of cable and satellite tv, one should be able to pick a dozen of their favorite channels. To say I have 100 channels sounds great but in reality I only have five or six that I'm interested in. They changed the weather channel form good to poor, the history channel from historical programs to pawn shops, and discovery to crawling around in old barns and attics. With 6,7,& 8 minutes of commercials every 15 minutes that we are paying to watch, we should get our tv FREE.
Still, most cable areas are a monopoly. So people can't go elsewhere for cable internet or anything else for that matter. So what motivation do they have to change?
Cable TV is way overpriced, but you can also thank the greedy corporations that own the channels and what they charge Comcast/Time Warner, et al for the "privlege" of carrying their signal. The cable companies should be shoving it back at them with the "privlege" for us WANTING you to be part of our subscriber base of MILLIONS.
Going ala carte will be one way they can survive. Then people can pick what they want to watch. The problem now is with ESPN being some of the most expensive channels to broadcast, they have to package in 10 shopping channels and 5 other crap channels to help offset. If people went ala carte then they could focus their dollars to their tastes, and people who want to pay a small mint to watch ESPN and their outrageous amount of commercialization on their networks, can, and those who want to spend all day on the sofa and watch home shopping, can do so without subsidizng ESPN to everyone else.
Cable packages as a whole SUCK in value, and that is why people are leaving. I was considering it when my "intro package" expired, but when I called the cable company up and mentioned I was thinking of changing since my intro expired, it took her about 10 seconds and suddenly "I have just extended your promo pricing for another year. Enjoy 70% off again."
Make a phone call, and save a buck. They know people are leaving and will quickly adjust your overinflated bill to keep you as a customer.
Let me pick the 12 stations I want for $2 or $3 each per month (maybe a little more for those who want ESPN because it costs more). If nobody wants a certain channel, that means cable companies don't need to carry it. It would create a little competition between the content providers too because they would no longer be able to count on being part of a bundle that is forced down consumer's throats.
Essentially I think it all comes down to cost. We are in a major economy downturn with high unemployment. wage cuts, benefit cuts, ect. However the cost of cable service continues to escalate. A package that cost $80 a few years ago now will cost $120 a month or more if you want premium channels.
Our current cost for our deal is about $89 a month and quite honestly the only reason I am forking over that amount is for the broadband internet service. If it was not for that I would cancel the whole shooting match and use my old 1950's antenna. The basic plan (one I can afford) has a handful of channels, 12 I think and about 1/2 of them we don't bother watching.
Cable companies, you want your customers back, consider some MAJOR price reductions and better ways for CUSTOMERS to select their channels.
Would love some input here. I don't watch much TV, never have but I do enjoy occasional sports, The Closer is always sharp and creative and old movies. I was watching AMC the other night and it ran 11 minutes of movie followed by 4 minutes of commercials. It's the same on all channels. That's the rub. We pay through the nose for the right to get TV broadcasts and then we wind up paying to view 25% or more of the time viewing commercials.
Congress should be pressed to require minimum hourly programming time such as 50 minutes. Let the stations charge more for less commercials. I'm just fed up with this crap and I know a lot of you are as well.
Well, this certainly explains why Verizon FIOS TV has changed from the company that cares, to the company that dares (dares to squeeze every drop of blood from longtime customers). My monthly bill just increased by $20.00, and no hole to run to. Verizon has always found a way in past, but now.....expect nothing from them.
i will never forget how they keep trying to cheat you on sneaky
billing practices, a dollar here and a dollar there, also, back before
dish and direct, i remember their arrogance, well guess what ah's,
what goes around, comes around!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Copyright © 2014 Microsoft. All rights reserved.
Only one of these troubled companies is worth owning, says Jim Cramer.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.