Delays In Cord-Buying Add To Cord-Cutting Dilemma

by Wayne Friedman, Aug 8, 2012, 4:57 PM

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Cord-cutting -- or shaving -- by cable, satellite and now even telco subscribers is an issue that nags at the core.

Cable operators may not worry too much, due to their other growing businesses of phone and broadband. For them, cord-cutting just means a shift in how consumers access their video and media.

Satellite operators like DirecTV may have another problem to consider, however. Losing customers can be significant, even when their remaining subscribers pay more every year.

One analyst says the key disturbing issue is falling pay TV penetration for consumers who move into new homes. They are increasingly not automatically starting monthly cable, satellite or telco TV service.

They seem to have some…hesitation.  And a delay can be deadly to TV businesses.

These consumers are thinking: "Hmmm... perhaps let me see if there is another way to get all the TV I need." The musing continues: "Does it come via broadband through new TV apps on Internet-connected TV sets?"  Or perhaps some other place?

The growth rate of pay TV is below the growth rate of "new household formation," says Sanford C. Bernstein, media analyst Craig Moffett. "Whether they are doing so because of online video options (as the technology press would have it) or poverty/affordability (as we would argue) is unclear."

Lack of clarity isn't good in any business, so multichannel TV providers may be whistling through the graveyard. And new TV providers – over-the-air, over-the-top, or under-the-radar -- may not need to whistle, but maybe just smirk. OTT companies like the Barry Diller-backed Aereo may have figured out the perfect financial/legal seam against the traditional TV networks’ refusal to allow over-the-air signals to be delivered directly to consumer devices without the deliverer paying much if anything to the networks.

New-home cord-cutters can sense that more is on the way -- so why pay $100 a month when you can get basically the same stuff for much less?

Whether new TV providers are "better" or "cheaper" may only be the first step. Cord-cutting isn't the problem for traditional TV sellers; it's the delay in cord-buying. As in football, baseball or other sports, any hesitation can put a crimp in the player’s success.

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