Cord Cutting and You

cord cut·ting

noun informal

1. the practice of canceling or forgoing a cable television subscription or landline telephone connection in favor of an alternative Internet-based or wireless service.
2. "the cable industry has seen a decline in television subscribers as customers engage in cord cutting"

There has been a lot of discussion in the media lately about "cord cutting" and its impact on cable consumers and providers. While cord cutting dedicated websites are bragging that the numbers cutting the cord are soaring, others are downplaying the total impact. A report by CNBC  says the 11th annual "Digital Democracy Survey" found that paid subscriptions to television services have remained stable since 2012. The article states:

 "In its survey of 2,131 consumers, Deloitte said two-thirds of respondents reported they have kept their TV subscriptions because they're bundled with their internet plan."  That doesn't mean that the streaming services aren't doing well with consumers, with the percentage of people who pay for at least one streaming service climbing from 10 percent in 2009 to 49 percent in 2016, but the study found that 74 percent of consumers continue to hold paid TV subscriptions in 2016."

For another cord cutting indicator, let's look at Comcast.

In 2016, Comcast reported that it added 80,000 video customers in the fourth quarter, down from 89,000 in the year before. For the full year, it added 161,000 video subscribers, compared with a 2015 decline of 36,000. Comcast said that was its "best result in 10 years." Analysts have been noting an "improved subscriber momentum" at big cable operators. In the first Quarter of 2017, Comcast reported the following highlights:

Cable Communications 1st Quarter 2017 Highlights:

• Cable Communications Revenue Increased 5.8% and Adjusted EBITDA Increased 6.3%
• Customer Relationships Increased by 297,000, a 9.9% Increase from the First Quarter of 2016
• Total Revenue per Customer Relationship Increased 2.6%
• Video Customers Increased by 42,000; Over 50% of Residential Video Customers Now Have X1
• High-Speed Internet Customers Increased by 429,000 and Residential Revenue Increased 10.1%
• Business Services Revenue Increased 13.6%, Nearly $6.0 Billion in Annualized Revenue
• (Earnings before interest, tax, depreciation, and amortization (EBITDA) is a measure of a company's operating performance. Essentially, it's a way to evaluate a company's performance without having to factor in financing decisions, accounting decisions or tax environments.)

While Comcast's numbers aren't showing an immediate panic caused by cord cutting, the industry is still worried about the impact of people moving away from traditional cable systems. An article in The Hollywood Reporter  states:

"MoffettNathanson analyst Craig Moffett
 pointed to signs of intensified cord-cutting in the first quarter, which Wall Street observers said seemed to spook investors and contribute to Wednesday's sell-off. "The first quarter is usually a seasonally strong one for pay TV. It wasn’t this year," he wrote in a research note. Moffett said that it was the drop of 762,000 video subscribers was the worst first-quarter loss ever for the pay TV industry."

The numbers for the satellite TV company Dish also seem to suggest some impact. In its 2017 Q1 earnings report, Dish said it lost 143 thousand net pay-TV subscribers, up from 23 thousand a year earlier. In 2016, Dish lost over 1 million satellite customers.

I do believe that cord cutting is a potential problem, but I think there are other factors that also play into the changing numbers. Netflix has maintained that the fact that they are growing while cable TV numbers have been relatively constant illustrates that consumers are keeping their cable connections while adding Netflix.  I do believe that as more new services like Hulu Live join the list of services like Sling TV, PlayStation Vue, and YouTube TV, they will have an impact on the traditional pay TV providers.  The industry will change, but I don't think we will see a great collapse anytime soon.

If you want to know more about options for cutting the cord, read this New York Times article, or visit the website untangle.tv.  Untangle offers a handy web calculator to look at what you currently view and how much money you can potentially save by cutting that cord.