Pay TV providers fret over penny-pinching viewers
PHILADELPHIA -- Porter McConnell gave up on pay TV last summer after noticing that monthly rates kept creeping up.
Now with no satellite or cable TV, she watches her trusty old TV set with an antenna or she goes online to catch her favorite programs. Once in a while, she buys shows from Apple Inc.'s iTunes service. McConnell also upped her subscription to Netflix Inc.'s movies-by-mail service so she gets two DVDs at a time instead of one, for $15 a month.
"Part of it is, I've got to economize," said the 30-year-old Washington, D.C., resident who works at a nonprofit.
McConnell is the kind of consumer who makes cable and satellite TV operators lose sleep. While a weak economy invariably makes people pinch pennies, this is the first time that viewing shows online has become a viable competitor to pay TV, making cutting the cord easier.
Cable operators are starting to notice. Glenn Britt, chief executive of Time Warner Cable Inc., voiced his concern Wednesday in a quarterly earnings discussion with analysts.
"We are starting to see the beginning of cord cutting," he said. "People will choose not to buy subscription video if they can get the same stuff for free."
It's tough to pin down how many people actually have given up cable — most of the evidence remains anecdotal — and which customers moved to a competitor.
Still, Time Warner Cable, the nation's second-largest cable operator, lost 119,000 basic video customers in the fourth quarter, even after excluding subscribers it gave up from the sale of some cable systems. The company also posted slower growth in new digital cable TV, Internet and phone subscribers.
More details will emerge as other cable and satellite TV operators report earnings in the coming weeks.
This is not to say that the cable business is in trouble. It's a mixed picture in this economy. While there will be some people who will completely give up their pay TV service, many folks will keep the subscription but cut back instead on going out to the movies. They also might give up a movie channel or two and buy fewer pay-per-view shows.
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