Yahoo Finance No cable network? No problem
This is a story the cable networks don’t want to hear.
One of the country’s smaller cable providers, Suddenlink, pulled the plug on Viacom (VIA) programming in October in a carriage fees dispute…and it didn’t matter.
Suddenlink, which covers about 1.4 million homes in 16 mostly southern states, says despite losing channels such as Nickelodeon, MTV and Comedy Central, just a tiny number of customers-- three-tenths of one percent-- dropped their service in the fourth quarter. CEO Jerry Kent saying:
We believe we have successfully challenged the current video business model, proving that our programming partners must deliver value to our customers in line with what they charge.
Yahoo Finance’s Aaron Task feels there is a very strong message here:
“This is a warning to all content providers that there is so much choice out there that if you are dropped from a cable system, people might not notice,” he says. “And even if they do notice, they can go online and watch most Viacom programming.”
Task adds he’s that kind of customer.
“I watch The Daily Show on the computer even though I’m paying for cable,” he notes. “There are so many ways you can consume this content if it’s not in your cable package, then OK, you can find it somewhere else.”
And Task points out cable programming providers aren’t the only ones who need to worry about this trend.
“Ultimately, this is really troubling for the cable companies,” he argues. “They’ve made their business on packaging all this content together and you’re going to pay for it all, even though you may use only some of it.”
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Suddenlink admits it did lose video customers in the quarter, but that was almost offset by gains in demand for internet services. Task’s reaction: Welcome to the 21st Century.
“It shows how important broadband is for most Americans today than it is to have cable TV,” he points out. “And I’m sure millennials are saying, ‘Well yeah, duh. This is why we cut the cord and why we never pay for television.’”
Task hopes what’s happened for Suddenlink is a harbinger of changes to come.
“Hopefully as a consumer this pushes us closer to that idea of an a la carte system where I’m just going to pay for the stuff I want to watch,” he says. “I’m happy to do that. I just don’t want to pay for the other 500 channels I don’t even know I have, much less ever watch.”
Task notes, however, that cable companies do have a very important trump card.
“They have that last mile into homes, so we still need them unless we go all Wi-Fi,” he explains. “But why do I need to pay $120 a month for all these services when I’m only using a tiny fraction of them? That’s the fundamental question consumers should be asking and these companies are going to have to answer.”
