Peter Kafka

Recent Posts by Peter Kafka

Yes, Cord Cutting Is Real, Says Report That The Cable Guys Don't Believe

Back to the cord-cutting debate!

Research firm SNL Kagan says the U.S. pay-TV business lost 119,000 subscribers last quarter. That’s only the second time in history that this has happened, and the first time was the previous quarter.

And it’s important to note Kagan is talking about all pay-TV businesses, not just the cable guys. Or more accurately: The cable guys like Time Warner Cable and Comcast are losing more customers (741,000) than the satellite guys and telcos like Verizon are adding (621,000).

If you want to spin this positively for the pay-TV business, you can argue that the losses are slowing: In Q2, pay TV lost 216,000 subs.

And if you want to be a little less positive, you can argue, as the cable guys do, that if they are losing customers, it’s because the economy stinks.

Nonsense, says the cord-cutting crowd, who believes that people are starting to leave pay TV, in increasing numbers, for a combination of the Internet, rabbit ears and the likes of Netflix and Apple TV.

And Kagan is with the cord cutters here. From their release:
“It is becoming increasingly difficult to dismiss the impact of over-the-top substitution on video subscriber performance, particularly after seeing declines during the period of the year that tends to produce the largest subscriber gains due to seasonal shifts back to television viewing and subscription packages.”

Or in English. People are cord-cutting. It’s happening now.

But here’s the thing: There’s a valid reason for the pay-TV guys to say they don’t see what Kagan is talking about. Because they don’t. Or at least they have numbers that say otherwise.

Here’s Time Warner CEO Jeff Bewkes, who owns several very successful cable networks, speaking at an industry conference today. “The trend, as far as we can see it, continues up…it’s all good,” he told the New York Times’ David Carr. “They’re not cutting.”

And look at these numbers from cable powerhouse Viacom, whose CEO Philippe Dauman just dismissed cord-cutting talk as “much ado about nothing”. They show Viacom’s overall subscriber count, network by network, for the third quarter. And all of the domestic channels’ sub numbers, at least, have increased in the last year (click to enlarge):

So something, somewhere doesn’t add up.

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There was a worry before I started this that I was going to burn every bridge I had. But I realize now that there are some bridges that are worth burning.

— Valleywag editor Sam Biddle