Could cable companies become the next victim of the failing economy. Just a short while ago the high definition television forced the buying of new televisions and antennas. Will the change in subscriptions force cable companies to go the way of the dinosaur.
In my own neighborhood, last weekend we were besieged by Verizon workers walking door to door and knocking . They were hawking the arrival of their much cheaper service. This is something that cable companies must really think about. Customer service is awful at the big cable companies. How many times have you been on the phone for longer than an hour waiting for assistance?
The weak economy is hitting Americans where they spend a lot of their free time: at the TV set. They’re canceling cable and satellite TV subscriptions in record numbers, according to an analysis by The Associated Press of the companies’ quarterly earnings reports. The U.S. subscription-TV industry first showed a small net loss of subscribers a year ago. This year, that trickle has turned into a stream. The chief cause appears to be persistently high unemployment and a housing market that has many people living with their parents, reducing the need for a separate cable bill. But it’s also possible that people are canceling cable in favor of cheap Internet video. Such a threat has been hanging over the industry. If that’s the case, viewers can expect more restrictions on online video, as TV companies and Hollywood studios try to make sure that they get paid for what they produce.
The first quarterly loss for the group, which serves about 70 percent of households. It includes four of the five biggest cable companies, which have been losing subscribers for years. It also includes phone companies Verizon Communications Inc. and AT&T Inc. and satellite broadcasters DirecTV Group Inc. and Dish Network Corp. These four have been poaching customers from cable, making up for cable-company losses – until now.
The phone companies kept adding subscribers in the second quarter, but DirecTV and Dish combined lost them, a first for the U.S. satellite TV industry.
Do you still subscribe to cable via a traditional cable company?
The recent tally excludes Cox Communications, the third-largest cable company, and a bevy of smaller cable companies. Cox is privately held and does not disclose subscriber numbers. Sanford Bernstein analyst Craig Moffett estimates that the subscription-TV industry, including the untallied cable companies, lost 380,000 subscribers in the quarter. That’s about one out of every 300 U.S. households, and more than twice the losses in the second quarter of last year. Ian Olgeirson at SNL Kagan puts the number even higher, at 425,000 to 450,000 lost subscribers.
The second quarter is always the year’s worst for cable and satellite companies, as students cancel service at the end of the spring semester. Last year, growth came back in the fourth quarter. But looking back over the past 12 months, the industry is still down, by Moffett’s estimate. That’s also a first. The subscription-TV industry is no longer buoyed by its first flush of growth, so the people who cancel because they’re unemployed are outweighing the very small number of newcomers who’ve never had cable or satellite before. Dish CEO Joe Clayton told analysts on a conference call Tuesday that the industry is “increasingly saturated.”
What do you think? Will cable companies as we know be a thing of the past?
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