Cable TV Farewell? Honcho Stuns Investors by Saying Industry Is Broken, Too Expensive
In a presentation to cable television leaders, industry giant Charter Communications said cable has a major problem: Its model is broken, and it is too expensive for consumers in an era when there are so many other options.
Charter — the second-largest cable TV company in the U.S. — delivered an 11-page report to the industry Friday warning that streaming services are far cheaper and customers are cutting the cable cord at a faster rate all the time, The New York Times reported.
Worse, it said, cable’s costs seem to be rising even as customers are signing up for cheaper services.
Charter’s warning came one day after the Walt Disney Co. pulled Disney and ESPN from the nearly 15 million subscribers of Charter’s Spectrum cable service as the two sides were unable to agree to a carriage license.
Charter CEO Christopher Winfrey explained that Disney’s decision to try to raise its carriage prices is an “untenable” situation for cable providers, especially since the eventual plan for ESPN is to go 100 percent streaming.
— Charter News (@CharterNewsroom) September 1, 2023
Charter’s stock tumbled more than 3 percent after the company’s report Friday, and the decline has continued this week.
Charter was not alone. After Winfrey’s declaration that his business model was “untenable,” Warner Bros. Discovery, Paramount Global and Comcast stock also took a big hit.
Winfrey told investors that cable companies need more flexibility from the networks.
“If we can have the flexibility to package and price it in the right way, we think it’s good for customers and it’s good for us. And ultimately, it’s much better for programmers over time as opposed to having the cord cutting continue to accelerate at the pace it’s going,” he said, according to CNBC.
Winfrey, for instance, wants to offer ESPN and Disney’s streaming to his cable services so customers don’t abandon him or have to pay both for his service and separately for the streamers.
Sports is one of the biggest areas of competition in the entertainment industry. It still earns some of the highest viewership on TV, so services — including streamers such as Apple and Amazon — are working to gobble up as much programming as they can.
The competition is fierce.
Still, even Disney understands that ESPN as a cable network is a dead weight. The House of Mouse has been desperate to find partners to help pay the bills.
But cable has other pressures.
One of Charter’s latest moves, which is set to launch later this year, will allow customers to ditch their cable boxes and instead access programming through an app. The venture is going to be cooperative with Comcast.
However, it seems like cable providers are fighting a losing battle. According to The Hollywood Reporter, cable lost 5.8 million subscribers last year alone.
“The largest pay-TV providers lost a total of 5.8 million net video subscribers in 2022, compared to a loss of 4.7 million in 2021,” the outlet reported in March.
Cable certainly has an illustrious history. Some of the greatest shows appeared there, including “The Sopranos,” “Ray Donovan,” “Mad Men” and “Yellowstone.” It brought us a golden age of TV.
But with the writers and actors strike rolling onward, movies tanking, TV providers cutting costs and canceling shows and Hollywood talking about replacing actors with AI, one has to wonder what the future of entertainment will be.
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