Cord-Cutting Reaction Is Deep Sigh -- Even As Pay TV Prices Continue Climbing

More so than with food, clothing, gas or landscaping, the cost of pay TV for consumers continues to climb faster than the rate of inflation. And we are doing pretty much nothing about it.

I speak of the still somewhat-benign activity of cord-cutting, which has been negligible -- partly due to pay TV additions from new households.

Leichtman Research Group estimates pay TV subscriber losses last year at 104,521 -- or about 0.1% of customers. Doesn’t sound like much.

And customers who are considering cord-cutting? Every year around 8% to 10% say they are probably going to cut. But do they really take action? Not so much.

So media distribution companies -- formerly known as cable, satellite and telco companies -- are still not all that worried.

Revenue growth from pay TV coffers was around 3.7% in the second quarter 2014, according to MoffettNathanson Research.  This same 3.7% is the average rise of consumers’ monthly programming costs.



MoffettNathanson says the consensus of big media players is still one of being “comfortable,” yet the research company say the risks for the entire pay TV system have never been higher.

Media disruptions appear all over. You have only to think about Aereo, the renegade Internet-delivered TV service that the Supreme Court essentially declared a “cable system.”

Though the Supremes’ decision was clear-cut -- with little dissension -- consumers and entrepreneurs continue to seek alternatives. Why? Maybe it has to do with that 3.7% annual price hike for pay TV -- which actually has dipped in recent years.

But it hasn’t dropped far enough. We continue to wait for the next disruption, for some cracks in the system that will change the game. But actual cord-cutting in real numbers? Not yet.

2 comments about "Cord-Cutting Reaction Is Deep Sigh -- Even As Pay TV Prices Continue Climbing".
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  1. larry towers from nyu, August 8, 2014 at 9:03 p.m.

    You know why there isn't much cord cutting? Because in most markets cable companies ARE the alternative, they are the isps as well. Most markets are virtual monopolies. Providers create packages that are carefully priced so that bundles of Cable/phone internet together are almost bearable. Dumping just the cable option from the bundle doesn't actually save you that much. There is no real competition. Maybe if Google fiber goes nation wide there will be a real choice.

  2. Nicholas Schiavone from Nicholas P. Schiavone, LLC, August 10, 2014 at 5:11 p.m.

    Yes, indeed. Where is the evidence?

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