Cable TV Seen as 'Failing' Business, With Programmer Action Needed
Cable TV "as a business is failing" on rocketing costs of sports and broadcast programming, said American Cable Association President Matt Polka in an interview with C-SPAN's The Communicators. Mediacom Group Senior Vice President-Legal and Public Affairs Tom Larsen hopes programmers will become more sensible about pricing: "It has been a great ride for all of us for a lot of years; let's not end it now. Let's try to make this work." NCTA didn't comment Thursday.
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"It's very, very difficult for a cable operator in many cases to break even" on video programming, Polka said. Larsen said video "is our worst product" in terms of profitability. Given the revenue it drives, "We are not ready to abandon it yet," Larsen said in the segment to be televised this weekend and put online.
Larsen said the cable pricing model could be improved with elimination of networks "that don't make sense." He said there are some signs of network shaving by programmers, examples being the axing of such cable networks as Pivot, Esquire and Al Jazeera America. "There's probably some more trimming ... that can happen," he said. Larsen said broadcasters, regional sports networks and ESPN need to contain spending for sports programming rights. "They have no concept of cost pain, they just pass it on to consumers," Larsen said. "If they were a little more sensible, it would be better for all." Larsen said Mediacom has seen a "steady deterioration" of its video business due to pricing and over-the-top competition. Cord-cutting "is the video issue of our time as consumers learn they have choice" via OTT, Polka said.
The biggest obstacle to cable offering skinny bundles is programmers, Larsen said. "They would rather continue to reap the cash from that model," with growth coming outside that model via OTT providers, he said. They also are the hurdle to a la carte offerings, Polka said, saying skinny bundles have been difficult enough due to penetration requirements in carriage agreements. But he said OTT services now have the a la carte offerings the public demands.
Cable operators broadly are "more upbeat" because of the regulatory philosophies of the Trump administration and Congress, Polka said. FCC Chairman Ajit Pai is clearly deregulatory, Larsen said, but "he is still not going to address some of the issues important to us, like retransmission consent. I don't expect him to do anything about it."
Mediacom doesn't directly compete with New Charter, but Charter last year buying Time Warner Cable and Bright House Networks means accelerating programming cost increases for it, Larsen said. "The big guys get the best prices and programmers look to the littlest guys to make up the differences." Polka said the industry was "flabbergasted" by the New Charter network overbuild condition under FCC then-Chairman Tom Wheeler. The FCC modified the overbuild condition in April (see 1704030039).
Polka said internet privacy regulations need to cover edge providers instead of focusing on ISPs. "The Googles of the world, the Amazons, are the ones that take this data and monetize it," Polka said. Larsen said cable ISPs are wary of the Title II regulations adopted by the Wheeler FCC, but Mediacom "had to take a gamble" and committed to spending $1 billion over three years to be an all-DOCSIS 3.1 network. He said 1 GB network speeds were launched in Q1 in 500 communities it serves, with another 900 to get the speed upgrade by year's end.