Cable companies hurt by fleeing video customers

The drop in business contributed to a decline in profit for Cablevision and Time Warner Cable.

By Kim Peterson Oct 28, 2011 2:43PM
It's hard to ignore the red flag in disappointing earnings this week from Cablevision (CVC) and Time Warner Cable (TWC).

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."

Tags: CMCSANFLX
230Comments
Oct 28, 2011 3:50PM
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Cutting cable frees up a fair size fee every month. Flip through your cable channels. How many do you even watch occasionally? 
Oct 28, 2011 4:08PM
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The cable companies had better start unbundling channels and come up with a menu pick list that will lower costs!  With worker bees getting undersized raises for quite some time now, not to mention unemployed folks, and the cost of necessities like food and fuel skyrocketing, entertainment dollars are going to go away...
Oct 28, 2011 4:50PM
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It's no wonder......200 plus channels and most of them are garbage.....do we need 15 shopping channels.....10 cooking channels......not to mention the spanish channels. They should offer you the option of what channels you want....not a group. I could care less about food network....cooking channel....HSN....but its part of a package. There is probably only about 30 channels that i watch. Just let me pay for what I want!!!!
Oct 28, 2011 4:40PM
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Overpriced product, poor customer service, unwilling to listen to customers input. Gosh makes you want to put up an antenna. 

Oct 28, 2011 4:51PM
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Dont feel bad at all for these cable companies.  Their product is way too costly and the customer service makes you want to screem.  They have really crappy and strategicly picked packages that only give you 1/3 of what the cost is worth.  I have an over 200+ channels and over 3/4 of these channels are junk.  In all those channels you would think that there was more that a selection of just a hand full or two to watch.
Oct 28, 2011 4:56PM
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I live out away from big cities. When the broadcasting companies went digital I no longer needed cable (satalite) to get my local channels. They all come in crystal clear with no extra charge for HD. I paid $60 for my antenna, a one time fee. The best kind of fee. Satalite cost $600 a year. Im going to take a vacation with my $540. :-)
Oct 28, 2011 5:09PM
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I remember when cable first came around. The idea of it being a pay service was because it was commercial free. Now you pay and get craploads of commercials or the HBO's etc. just keep shoving their programming down your throat. I also agree with others here about the packages they offer. I'm happy to see people leaving.  
Oct 28, 2011 5:01PM
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I have an antenna with local channels.  Love it and it's FREE!
Oct 28, 2011 11:20PM
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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.

Oct 29, 2011 10:23AM
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It's really amazing since I dropped cable two years ago, My kids are getting better grades in school,  scoring higher on the standardized tests for math and reading, and instead of hanging around and watching TV we actually find time to do things outside as a family for recreation.  Imagine making use of my already spent tax dollars at the public library or parks and not shelling out more to the cable companies that were making us fat, slow and uneducated.
Oct 28, 2011 4:54PM
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Crai us a river cable companies. If it weren't for your "high-speed" internet, you would be going belly up.

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?

Oct 28, 2011 5:04PM
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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.

Oct 28, 2011 6:25PM
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If cable companies would give people some reasonable options, they might be able to prevent them from closing their accounts.  We have a little over 200 channels.  We watch maybe 12 of them.  The rest are garbage in our opinion.

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. 

Oct 28, 2011 9:08PM
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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.

Oct 29, 2011 9:47AM
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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.

Oct 28, 2011 8:35PM
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I'm a disabled Vet on a very tiny(fixed) pension. When we get increases (very rarely) they don't
amount to a pizza a month. You can bet it doesn't work quite like that for the Cable Pimps. When
I signed up on my first contract with Comcast it was for $80 a month for digital cable and internet.
No premium stations (HBO, Cinemax,Showtime etc.) I rarely watch broadcast (network) TV.
But I do enjoy DISC,NATGEO,HISTORY,TLC MILITARY. Obviously can't get them except on a cable system. And  you only have the choice of one. Of course that being no choice at all. Why aren't these companies regulated. I hate BIg Government but the companies make no bones about
their "You don't like it, get something else attitude."
By the way that $80 a month is actually $100 w/fees. When this contract expires it goes up to 
$200 per month. How in the hell did the products value suddenly double overnight. At $100 is was barely affordable, at $200 impossible. That's more than 25% of my monthly income. If
regulated these current policies would bankrupt. them. When I boogie for Direct Tv the 
final result is $100+ less for them. They can't be stupid enough to wonder why people are jumping ship. It's really sad because the bottom line is GREED.
Oct 28, 2011 5:12PM
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Who wants to PAY for TV channels that has so much advertising on them ?  Use to be years ago when you'd complain about the ads on TV they would say "if you will pay for your service the ads will go away"  now we for the service and there are 10 times the amount of ads. Truth is, we were all better off BEFORE TV's
Oct 28, 2011 4:50PM
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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.Telephone receiver

Oct 29, 2011 7:22AM
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Not to fear. If they lose all their cable customers to high speed internet the they'll start charging outrageous prices for the internet. If they would let subscribers pick which channels they want at a reasonal price and get rid of all the crap channels that noone watches anyway people might be more apt to keep or get cable.
Oct 28, 2011 5:32PM
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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!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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