Video services

CableOne Shrugs Off Video Losses

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."

Want to know more about pay-TV subscriber trends? Check out our dedicated video services content channel here on Light Reading.

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

ted409 6/5/2015 | 5:36:16 PM
cables loss of subcribers i think their loss of 300000 subscribers is hurting them more than theyll let on

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




KBode 11/5/2014 | 7:54:25 AM
Re: A trend.. I'd wonder if you'll see a shift by many companies away from residential services entirely (kind of like we saw on the DSL side with Speakeasy, Megapath). If the public won't let them bill by the byte, and they can't afford to continue to offer TV services?
danielcawrey 11/4/2014 | 10:27:20 PM
Re: A trend.. CableOne cares about high-margin business, which makes a lot of sense to me. What's the big deal about cable subscribers when you can score businesses willing to pay top dollar for broadband.

Business customers always pay more for internet. That's how these things work, and it's a better proposition for CableOne, that's for sure. 
KBode 11/4/2014 | 1:10:15 PM
A trend.. I think there's a trend afoot where these smaller cable operators just give up on the unsustainable rate hike festival that is traditional television and embrace broadband as their primary product. Of course that raises pressures to impose usage caps and overages, something if I recall CableONE has kind of been at the forefront of?
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