Are Cable and Satellite Companies In Danger From Cord Cutting

Is the threat to cable and satellite TV real?

Trefis, a stock analysis firm, said Netflix’s continued success and the introduction of both HBO’s Now service and Dish Network’s Sling TV, the threat of people cutting the cord to cable and satellite services is higher than previously thought.

Reports from the 2015 Q1 noted the Pay-TV industry lost more subscribers than other quarters.

Are U.S. cable companies in danger of losing subscribers altogether? People may be surprised to learn not as much as they think. Why is that?

Both Time Warner Cable and Comcast are regarded as cable TV companies; but, they’re also broadband providers. About 47 percent of Time Warner Cable’s worth comes from broadband services with just 31 percent for Cable TV.  Even though subscribers are cutting the cord to the TV portion of the service and watching their content through the Internet, the companies are still in control of the distribution platform.

After all, most of the streaming content is watched over broadband, not just mobile networks.

It is possible broadband providers will go to a tiered data plan, meaning subscribers who view lots of streaming content could pay more for their Internet access.

Both DirecTV and Dish Network are considered more susceptible to subscriber loss because they’re not broadband providers. However, DirecTV does have its NFL Sunday Ticket and Dish has the huge wireless spectrum as well as the possibility of merging with a wireless company. Many people have recently unsubscribed from Dish, which makes it even more vulnerable.

Perhaps some of the M&A activity is being spurred by the potential of cord cutting. Since obtaining NBCUniversal, Comcast owns a large library of content, which is why it’ll still make money from video streaming.  There’s also talk that wireless providers are going to merge with Pay-TV (AT&T and DirecTV), which would give them even more protection.

Trefis notes the threat for cord-cutting is great – a movement that’s already taking place – but U.S. cable companies are not as in danger as people are being led to believe.


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