Cutting the Cord

As a poor college student, I pinch pennies whenever I can. That means Sunday night dinners at Cici’s Pizza, clothes from Target, and those god-awful compact fluorescent bulbs in my lamps.

It also means I won’t pay for cable. Not only would it be an unjustified expense to buy a bunch of channels so I can watch a few shows, but I simply don’t like to build my schedule around my television viewing. With options like DVDs, iTunes, Hulu, and soon Google TV, the benefits aren’t worth the cost.

It would appear that I am not the only one who thinks this. Cable subscriptions are dropping. Time Warner Cable forecasts a “subscriber deficit” for the third quarter, an announcement which led to a three-percent drop in TWC stock. Ivan Seidenberg, Verizon’s chairman and CEO, says such “cord-cutting” is a result of cheaper alternatives for younger, lower-income consumers who no longer desire to pay cable fees. Analyst Craig Moffett claims that this is not an issue to be concerned about yet, and that “evidence of cord-cutting remains scant.” Moffett blames the current economic condition for subscription drops, despite the fact that the recession is apparently over. (Who knew?)

Perhaps if Mr. Moffett weren’t a well-paid analyst he would realize that cord-cutting is indeed a very real occurrence among lower-income consumers. It may not be making a huge difference yet, but it would be very unwise for cable companies to ignore the potential for more frequent subscription drops in the future. Now, do I think that cord-cutting will be “the death of cable”? Of course not. People will continue to pay for cable due to the large amount of channels and shows available, but some of the poorer, less picky users will inevitably find alternatives, and cable companies may have to rethink their strategies as a result.

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The FCC sticks its mits in cable deals.

For nine months and counting, the Federal Communications Commission has been mediating Comcast Corporation’s buyout of NBC Universal, Inc. from The General Electric Company. The Friday meeting of economists [link] at the FCC headquarters is interesting in itself. While Bloomberg L.P. has been a respected source of financial news, its role in the Comcast-NBCU deal is a peculiar one:  it has an interest in the deal’s outcome [link]. Assuming the deal goes through, what will happen regarding CNBC and Bloomberg TV? Will Comcast, as Bloomberg currently demands, be forced to sell CNBC, or will some other deal arise? It is a given that the FCC will not allow Comcast to purchase NBCU without some concessions, given that this will the first time one of the “Big Six” media corporations is owned by a television provider. The FCC may indeed attempt to use this deal as an opportunity to gain some regulation of cable content, as they have been attempting to do for a long while.

Speaking of mediation, the FCC has been keeping an eye on the transmission renewal talks between Time Warner Cable and The Walt Disney Company [link]. While this is not particularly unusual, Time Warner Cable has asked the FCC to improve the retransmission process before, and should difficulties arise in reaching an agreement before the 2 September deadline, the FCC may step in and set a precedent for future scenarios.

Finally, a happier story:  Dish Network has begun offering AMC (owned by Cablevision) in HD [link]. This certainly adds some appeal; I am sure that there must be a few discontent cable users who were holding back on switching and who will now reconsider. Mad Men, which airs on AMC, is the only television show I actually watch on television. I watch everything else on Hulu or on DVD. Now if I can watch Mad Men on Dish’s new “TV Everywhere” site [link], I might reconsider as well.