Legacy Pay TV Companies Approach A Breaking Point

Imagine looking at the high-flying world of premium streaming platforms through the eyes of traditional cable TV operator executives.

They see all the big stories about streaming launches -- HBO Max, Disney+, Paramount+ and Peacock -- and they must wonder: How do we fit in?

It may not be about raising prices or even abandoning the business. Another option is to offer a completely different video-packaging product.

Charter Communications is considering this. CFO Chris Winfrey says that with rampant cord-cutting, cable operators satellite, telco and virtual companies will need to package video in a “really different way to create value for consumers.”

Winfrey did not reveal specific details. But one obvious way is to eliminate redundancy of networks that consumers already get. In addition -- and obviously -- the could eliminate networks' big sports package. And perhaps, like the Rokus and Amazons of the world, they could get more streaming app options themselves.



Right now, even with big-time cord-cutting, major cable operators are still profitable. Though those profits are continuing to sink. Winfrey says a breaking point is coming.

It isn’t just the eye-candy premium streaming bring to the table causing cord-cutting. Winfrey says there is a massive amount of password-sharing occurring with those TV network-owned premium streamers -- making entry for consumer more affordable.

Right now, he says, there is essentially no “security” for these platforms. “So their content is being devalued in every way.”

All of this means those low-cost, mostly sub-$10 a month-priced platforms end up resulting in an even lower average monthly cost for some subscribers -- and lower profitability for TV network group owners.

But don’t worry about companies like Charter Communications.

Cable video-based operations have been taking a predictable back seat to formerly cable TV-centric companies for some time -- especially as they witness rising fortunes from a still-growing broadband business.

But they aren’t giving up. At an investor conference last month, Charter CEO Tom Rutledge said traditional pay TV businesses can still be profitable -- for pay TV providers and TV networks. Again, we need specifics.

Much of his optimism may come from potentially big dollar expectations -- advertising and otherwise -- for new streaming/digital platforms. Someone will be needing to pay less -- pay TV services, networks, and/or consumers. For consumers, that may be getting less as well.

1 comment about "Legacy Pay TV Companies Approach A Breaking Point".
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  1. Ed Papazian from Media Dynamics Inc, June 15, 2021 at 1:21 p.m.

    Wayne, the last time I looked at some data---fairly recently---the biggest losses in subscribers by a wide margin were  by the satellite distributors. In contrast, the larger cable servises were down by about 5-6% -or a third of the annual drop that the satellite guys were suffering. In fact, the larger cable services were signing up homes for telephone and internet service to about the same extent as they were losing them for TV. That does not mean that everything is rosy for the big cable system operators, but they do seem to be still quite profitable. The next step, obviously, is for them to develop more flexible bundles that allow subscribers to select from well organized and less duplicated assortments of cable channels. Their problem is that by law they must carry all local stations, which means that you automatically get all five broadcast TV networks plus all independent and PBS stations whether you want them or not. But that's not a lock for the many cable channels.

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