Published: October 30, 2011
(Page 2 of 2)
Cable companies have seen TV subscriptions shrink relatively slowly in recent years as customers price-shop and switch to two types of competitors — satellite distributors like DirecTV and Dish Network, and telecommunications competitors like Verizon and AT&T.
Investors are watching those competitors for signs of overall weakness in the industry. There was a bit of it last month, when FiOS from Verizon and U-Verse from AT&T each showed smaller TV subscriber gains in the third quarter than in prior quarters.
But Verizon said it expected growth to pick up in the fourth quarter. DirecTV and Dish will report earnings in early November, as will Comcast and other cable heavyweights.
Mr. Jayant said one reason for industry optimism was the recent stumble by Netflix, which angered subscribers over the summer by raising prices for its combination streaming and DVD-by-mail service.
“When Netflix loses 800,000 subscribers,” Mr. Jayant said, “the fear of cord-cutting goes away a little.”
Netflix and services like it are increasingly being positioned as supplements, not replacements, for traditional TV subscriptions as the major studios, networks and distributors work to preserve their existing business models.
In fact, the biggest fight now is not between Netflix and traditional distributors, but between DirecTV and News Corporation.
In a feud over fees, DirecTV said some News Corporation cable channels could be blacked out on Tuesday because it refused to pay — and pass along to subscribers — a 40 percent increase in the price of a bundle of channels including FX, Speed, Fuel TV, Fox Soccer and 19 regional sports networks. News Corporation accused DirecTV of negotiating in bad faith, and the spat spilled into public view last week.
“It’s unfair for them to demand a 40 percent increase for the same networks you enjoy today,” DirecTV’s chief executive, Michael White, said in a video message to customers this weekend.
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