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Cable subscribers flee, but is Internet to blame?
NEW YORK (AP) - TV subscribers are ditching their cable companies at an ever faster rate in the past few months, and many of them aren’t signing up with a satellite or phone competitor instead.
Their willingness to simply go without pay television could be a sign that Internet TV services such as Netflix and Hulu are finally starting to entice people to cancel cable, though company executives say the weak economy and housing market are to blame.
Third-quarter results reported this week by major cable and satellite TV companies show major losses, but don’t settle the question of what’s causing them.
If “cord-cutting” in favor of Internet video is finally taking hold, that has wide-ranging implications. Consumers who use the Internet to get their movies and TV shows bypass not just the cable companies, but the cable networks that produce the content. The move could have the same disruptive effect on the TV and movie industries as digital downloads have already had on music.
A few weeks ago, the CEO of phone company Verizon Communications Inc. likened cord-cutting to what started happening to the local-phone companies five or six years ago, when people started giving up their landlines in favor of relying solely on their cell phones.
“The first thing when that happens is you deny it,” Ivan Seidenberg said. “I know the drill. I have been there.”
On Thursday, Time Warner Cable Inc.’s chief operating officer, Landel Hobbs, said the company doesn’t see evidence of people dropping cable in favor of the Internet. He said the biggest subscriber losses have been among people who don’t have cable broadband services; high-speed Internet _ from cable or a competitor _ is key to watching video online. These people seem to be going to satellite or giving up on pay TV entirely.
On the theory that college students might be among the first to drop cable TV, the company looked at changes in subscriber figures in college towns such as Austin, Texas, and Columbus, Ohio. They weren’t out of line with previous years, and they corresponded to the level of student enrollment, he said.
“We’ll continue to monitor cord-cutting, but haven’t found evidence where you might expect to see it,” Hobbs told analysts on a conference call.
Time Warner Cable lost 155,000 video subscribers in the July-September quarter, compared with 64,000 a year ago.
The only larger cable company, Comcast Corp., reported last week that its subscriber loss more than doubled in the third quarter, to 275,000. Comcast said many of those leaving had taken advantage of low introductory rates that the company offered last year when the analog TV broadcast network was shut down.
Of the satellite companies, DirecTV gained subscribers and Dish Network Corp. lost them. On a conference call Friday, Dish CEO Charlie Ergen said the Internet was making itself noticed as a competitor.
“You know, my kids think I’m crazy for being in the pay-TV business because they don’t pay for TV. They don’t pay for movies,” Ergen told analysts.
The country’s eight largest publicly traded pay-TV companies, representing about 85 percent of the subscriber total, had reported their results for the third quarter by Friday. These cable, phone and satellite companies showed a combined gain of 66,700 video subscribers, or a 0.3 percent increase at an annualized rate, about a third the growth of the population.
The figure was a slight recovery from the seasonally weak second quarter, when they gained just 12,400 subscribers. But it’s far short of the 401,300 subscribers gained a year ago.
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