Cutting the Cord – Again

October 20, 2017
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The WSJ is reporting that AT&T is losing traditional cable TV customers.

AT&T said in a securities filing late Wednesday that its video-subscriber base declined by about 90,000 customers in the third quarter as customers abandoned its fiber-optic-video and satellite-TV services. The decline, its third quarterly drop in a row, came despite nearly 300,000 new accounts on its DirecTV Now service, which streams channels over the internet.

Other cable TV providers are also losing their higher-margin subscribers to cheaper Internet streaming services. Streaming services continue to create content bundles similar to the traditional CATV bundles that appeal to consumers.

Moreover, this increased downstream competition is forcing content providers to negotiate lower prices to content distributors.

Shares of media companies also fell. AMC Networks Inc. lost 6.8%, Viacom Inc. declined 2.5% and Walt Disney Co. slid 1.6% on Thursday after Guggenheim Securities analyst Michael Morris downgraded the stocks. “We expect pressure on subscriber trends and audience size to continue for the foreseeable future” across the entire sector, he wrote.

For those of us old enough, this has a familiar ring to it. One of the FCC’s policy goals in the 1990s was to increase competition for the local telephone telephone monopolies. However, it was difficult to get anyone to invest in stringing new wires to each household. A few foresaw that the growth mobile phone industry would lead to ‘cord cutting’ by millions in the US (and provide service to billions worldwide).

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