Traditional Pay-TV Operators Lost 6 Million Subscribers in 2019 as Cord-Cutting Picks Up Speed

osu1991

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The U.S. satellite and cable TV business declined at an unprecedented rate last year — with traditional pay-TV providers dropping a staggering 6 million customers, a 7% decline year-over-year.

Pay-TV penetration hit an all-time high of 87.8% of U.S. households in 2009 — slipping over the past decade to 65.3% at the end of last year, per MoffettNathanson’s estimates.
 

Zookster

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While Sling TV lost almost 100K subscribers in Q4 2019 (source). Though I'm sure the price increase and dropping the Fox RSNs in over a dozen major US cities played a part.

And Dish's CEO Charlie Ergen is now saying a merger with DirecTV feels inevitable in an earnings call (source).
 

comfortably_numb

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Duh! This downward spiral will just continue until linear TV companies are all in bankruptcy.

These businesses never learn. They follow the exact same model the newspapers do- just keep charging more and more until they go out of business.

In an unsurprising twist, the Kansas City Star filed for bankruptcy last week. Who knew that customers wouldn't continue to pay $650 for a 6 month subscription to a newspaper? Instead of cutting overhead, or maybe cutting CEO's and VP's who make $23 million a year, they just kept passing the costs along to the customer until they died. Linear TV will do the same thing. Oh yeah, that "responsibility to the shareholders" thing.

If it were my business, I'd take a pay cut to keep my business solvent. Instead, these guys just keep sucking at the tit until there's nothing left. Then they just call it a day and walk away. What happened to the innovation? The competition?

Dumb, dumb, dumb.
 

ncted

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Duh! This downward spiral will just continue until linear TV companies are all in bankruptcy.

These businesses never learn. They follow the exact same model the newspapers do- just keep charging more and more until they go out of business.

In an unsurprising twist, the Kansas City Star filed for bankruptcy last week. Who knew that customers wouldn't continue to pay $650 for a 6 month subscription to a newspaper? Instead of cutting overhead, or maybe cutting CEO's and VP's who make $23 million a year, they just kept passing the costs along to the customer until they died. Linear TV will do the same thing. Oh yeah, that "responsibility to the shareholders" thing.

If it were my business, I'd take a pay cut to keep my business solvent. Instead, these guys just keep sucking at the tit until there's nothing left. Then they just call it a day and walk away. What happened to the innovation? The competition?

Dumb, dumb, dumb.
McClatchy's problem isn't as simple as exec pay. A couple million a year in actual exec compensation savings wouldn't have saved them from bankruptcy. Their problem was taking on too much debt to buy KR right before the Great Recession and then letting people who haven't the first clue about the Internet determine their digital strategy. I don't want to share too much as a former employee, but I will say there was a fundamental lack of understanding of both the market for their product and how the technology actually worked.

At the time when all the big online media chains were building their own solutions, McClatchy abandoned a mature, custom online platform that gave the company everything it needed at the time plus the flexibility to add functionality as time went on. They replaced it with an old-school "enterprise" solution based on Oracle/Java/WebLogic which turned out to be very hard to develop new features on which the company desperately needed to do. Then they outsourced their technology responsibilities to the lowest bidder, which paralyzed their ability to develop what the business needed. They maybe saved around $2 million per year on the outsourcing, but it probably cost them tens of millions in lost opportunities, right when they needed them most.

It was one of the hardest decisions in my career to leave but having been through similar outsourcing situations at Nortel and GSK, I knew what was coming, and I knew there was no point in trying to make something impossible work. I couldn't have changed the outcome. The forces at work were out of my control, and it was a bankruptcy 20+ years in the making.

Now, as for how this applies to the pay TV market, it is eerily similar. How people consume content is changing, and it is going to result in casualties and collateral damage. A lot of channels are dead, but they just don't realize it yet because the people responsible for foreseeing where the business needs to go still think it is the 1990s.
 

comfortably_numb

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the people responsible for foreseeing where the business needs to go still think it is the 1990s.
I'm afraid I have to include Charlie in that. He may indeed yet merge Dish with Direct, but all that does is delay the inevitable. I bet he'll sit back and watch the whole thing burn while he sucks every last bit of profit from it.

At a time when Satellite TV is under attack from streaming platforms, they should be doing everything they can to retain customers, not jacking prices every chance they get. All that does is hasten the demise.
 

Wescopc

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I'm afraid I have to include Charlie in that. He may indeed yet merge Dish with Direct, but all that does is delay the inevitable. I bet he'll sit back and watch the whole thing burn while he sucks every last bit of profit from it.

At a time when Satellite TV is under attack from streaming platforms, they should be doing everything they can to retain customers, not jacking prices every chance they get. All that does is hasten the demise.
I think Charlie has tried more than most - but he can not control the prices the program producers are charging.
 
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mwdxer1

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Duh! This downward spiral will just continue until linear TV companies are all in bankruptcy.

These businesses never learn. They follow the exact same model the newspapers do- just keep charging more and more until they go out of business.

In an unsurprising twist, the Kansas City Star filed for bankruptcy last week. Who knew that customers wouldn't continue to pay $650 for a 6 month subscription to a newspaper? Instead of cutting overhead, or maybe cutting CEO's and VP's who make $23 million a year, they just kept passing the costs along to the customer until they died. Linear TV will do the same thing. Oh yeah, that "responsibility to the shareholders" thing.

If it were my business, I'd take a pay cut to keep my business solvent. Instead, these guys just keep sucking at the tit until there's nothing left. Then they just call it a day and walk away. What happened to the innovation? The competition?

Dumb, dumb, dumb.
$650 for 6 months of as newspaper? Ouch! No thanks. I have not subscribed to as paper in years.
Who can afford these rates? Streaming is the future with lower prices. HBO MAX for $15 a month, too expensive for me, when I got the 3 year deal with Disney+ for $4 and some change by the month.
 

comfortably_numb

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$650 for 6 months of as newspaper? Ouch! No thanks. I have not subscribed to as paper in years.
Who can afford these rates? Streaming is the future with lower prices. HBO MAX for $15 a month, too expensive for me, when I got the 3 year deal with Disney+ for $4 and some change by the month.
There are still MANY people who want the paper, but McClatchy stonewalled them. They only offered good rates to "new" subscribers and screwed over the loyal ones (sound familiar, ATT?) This strategy makes zero sense to me.
 

ncted

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There are still MANY people who want the paper, but McClatchy stonewalled them. They only offered good rates to "new" subscribers and screwed over the loyal ones (sound familiar, ATT?) This strategy makes zero sense to me.
AFAIK, the cost of subscriptions is still just what it takes to print and deliver it. The problem is, with fewer and fewer subs, the price per sub goes up really fast because the costs to run the press (including depreciation) and deliver it across an unchanging or expanding geographic region don't go down. As with most things, the costs only go up. At this point, the options are to take an ever increasing loss on delivering to a shrinking number of people or continue to pass the costs on to the people who are willing to pay. At one point, we actually did an analysis, and it was cheaper to give every subscriber a Kindle DX they could use to read a digital version than it was to continue printing the paper. I'm sure it has only gotten worse.

As for Sling losing subs, that at least is just due to competition, and they know who they are competing against. With newspapers, the competition was this nebulous thing they didn't understand because the people making the decisions came to power during the good times when they had 80% profits and 95% market penetration for advertising. Worse, they weren't interested in really understanding what they were fighting, or at least not enough of people in the right positions were.
 
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comfortably_numb

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BINGO! And don't even think the streamers won't face the same problem.
I've said this before, it doesn't matter if the program producers are the dark wizard behind the curtain "forcing" carriers to pass along higher costs to the consumer. Customers don't know that (and quite frankly they don't care). It's the bottom line price that is driving the exodus. So carriers either need to get smart and innovative and come up with solution(s) or just roll over and die. They need to stop blaming the boogeyman (even if the boogeyman is really to blame).
 
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