In a telling sign that the pay-TV business ain't what it used to be for cable operators, CableOne posted another big loss in video subscribers and dismissed the loss as a mere nuisance at most.
Cable One Inc. , the tenth-largest MSO in the US with nearly 500,000 video customers spread across smaller markets in 19 states, reported Tuesday that it shed about 14,100 TV subscribers in the third quarter. While this figure represents a slight improvement over the nearly 14,700 video subs it lost in the same period a year ago and a much bigger improvement over the 34,000 subs lost in the second quarter, it still dropped the company's sub total to a new low of 476,000.
Even more notably, it meant that CableOne has now lost about 85,000 video customers, or 15% of its subscriber base, in just the past 12 months.
But that doesn't seem to bother CableOne executives much. In fact, unlike most other larger cable operators, the MSO practically played up the subscriber loss in its earnings release yesterday, boasting that its bottom line is actually improving with fewer video customers even though its overall revenue is declining. For instance, the company reported that its operating expenses fell 4% on a year-over-year basis to $155.6 million while its operating income edged up 1% to $40.1 million.
"The cable division continues its focus on higher-margin businesses, namely high-speed data and business sales," CableOne's owner, Graham Holdings Co., said in the earnings release. "Due to rapidly rising programing costs and shrinking margins, video sales now have less value and emphasis (subscribers down 15% over the third quarter of last year) and programming costs have been reduced significantly."
Of course, some of this could just be company bravado. For much of the year, CableOne has been battling with Viacom Inc. (NYSE: VIA) over programming contract renewals. In April, the MSO made a splash when it dropped Viacom's 15-network bundle -- including MTV, Nickelodeon and Comedy Central -- rather than pay the higher carriage fees that Viacom demanded. Justifying its decision, CableOne said then that its customers simply didn't value the Viacom networks that highly.
But CableOne's downplaying of the traditional pay-TV business seems to be more than just lip service. As we've previously reported, the MSO is one of a number of small and midsized cable operators that have been paring back their linear video offerings for years because of rising programming costs and growing consumer adoption of online video. Instead, it has been focusing on building up its broadband business, which now boasts more customers than its video unit for the first time. (See Is Dumb Pipe the Smart Move?)
In one of the latest signs of this shift towards broadband and online video, CableOne recently struck a deal with Netflix Inc. (Nasdaq: NFLX) to integrate the Internet video giant's programming into its video offerings. With the July deal, CableOne became the third top 10 US MSO to agree terms with Netflix since the spring, following in the footsteps of Suddenlink Communications and Mediacom Communications Corp. .
— Alan Breznick, Cable/Video Practice Leader, Light Reading
today i woke up to find theyd taken away another channel off the standard package
one of the few decent ones left to watch
guess i ll call directtv . cableone gave me 6 months of free second tier svce
so thatll carry me till i switch
some person burned up their euipment a few years back and knocked out service for a couple of days. i actually felt remorse for them now after them burning me
on my tv service all i got to say is i hope whoever did it got away free/
the first time i called this guy said they were going to replace it then when i called back to find what else they were going to take away they sid they had no plans in the near future maybe one or two years down the road
when they dumped viacom they said theyd replace the channels
well they put all but 2 on a higher cost tier
when i called this woman was in a panic mode saying they had to make up revenue lost by the mass exodus of customers that alone was enough to say
they were in a panic mode. since then theyve continuded to lose customer
totalling about 300k
for the 75 a month i pay here i can get 200 channels from directv
so thats what ill do when my free six months of the additonal tier is up
one of their execs told me if theres something they dont want to mess with they
just tell the fcc thats all they can do and walk away from it
on the phone side thers complaints of servicemen never showing up
you have 20 plus minut wait times to talk to the tech dept
basically there service is mediocre at best
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