This week, the business buzz is all about U.S. cable TV networks and the problems they (and their parent companies) face from streaming services like Netflix and Hulu, which are causing more and more Americans to cut the cable cord and opt for OTT services like Roku and Apple TV rather than traditional cable TV subscriptions. TV ratings are down, cable TV subscribers are down. As such, advertiser rates and stocks are down.
This situation comes as no surprise since it had been brewing for many years. But the cable TV sector can no longer ignore issue; it has to face it by coming up with innovative plans to not only stop the hemorrhaging subs, but also regain some of them.
Because the continuing decline in the number of pay-TV subscribers for both cable and satellite could mean that the big entertainment companies’ profits — which for now are still decent— will soon face major declines.
“There has been no dramatic new information released during this period, just a dramatic reassessment of what cord-cutting and streaming will mean for the big entertainment companies — most of which have big cable networks,” wrote Bloomberg View.
On the flipside, Internet TV service Netflix reported back in July that their subscriber numbers are growing quickly (they now have 65.6 million subscribers internationally). On one hand, that’s a good thing for those same big content companies that can now sell (a lot of) off-network product to Netflix, it’s just not a great thing for their cable networks, which rely on a subscriber-fee-plus-advertising business model.
ESPN, the country’s biggest sports channel (of which Walt Disney Co. owns 80 percent), has lost many subscribers in the past year. Traditionally sports are seen as a major reason for people to hold onto traditional (and pricey) cable bundle packages. But “the latest figures suggest even that may not be enough to stop viewers demanding slimmer cable packages or moving online to watch standalone streaming services,” according to Business Insider.
Disney’s shares fell nine percent on Wednesday and another 4.5 percent by mid-day Thursday (however, that drop has put Disney on the most-buy list for many analysts).
Time Warner – owner of CNN, HBO, TNT and TBS — also saw its stock fall nine percent on Wednesday and then another 4.5 percent on Thursday.
Twenty-First Century Fox shares closed down seven percent.CBS also saw its shares fall almost five percent in regular trading. (They recovered slightly after the bell, according to Business Insider.)
Viacom — which owns Comedy Central, MTV, VH1 and Nickelodeon — saw shared fall 20 percent after the company reported disappointing revenue.