Have you cut the cable yet? There has been a lot of coverage in the news, trades, and other media about how millennials have abandoned “traditional” delivery methods for video product (like cable), and instead are relying on services like Netflix, Hulu, Amazon and the like. These services have not yet figured out how to deliver live news or sports (or don’t know how to monetize it), but they’ve done a better job than the terrestrial networks in creating compelling original content.
Of course, living your life “uncabled” saves money. As I recall, my first cable service was from a company called “Telepromter” which at one time was the largest operator in the country. I think my monthly fee was less than $5.00.
Now it’s easy to have a cable bill north of $200, and if you’re like me, at least 60% of the content delivered is of no interest; I pay for shopping, religion, sports, and foreign language channels, none of which I would ever watch. On top of that, if I want “premium” content, (HBO, Showtime), I have to pay extra for that.
There are extra fees for decoder boxes and outlets in multiple rooms, add another 10% or so for “local franchise fees,” the amount a city charges a cable company as a license fee to operate in the community.
So I’m curious. Are there people sitting around the executive suite of Comcast going “holy sh*t, we are really screwed.” Because they are.
They bought NBC/Universal, so at least them have an in-house stream of content, but as I alluded to above, traditional network television hasn’t really been very successful at grinding out the hits. Now there is all this hubbub about Comcast trying to buy some Time Warner cable assets. More hard wired delivery technology? Why?
According to their September 2014 balance sheet, Comcast has $104 BILLION in debt. Share prices hovering around $55. Market cap, $145 billion. $67 billion in revenue. 136,000 employees. About a half million in revenue per employee. $750 thou in debt per employee. Costly buildings, property, trucks and cable and infrastructure.
Compare that with Netflix. Share price over $300. Market cap, $20 billion. Revenue: (12/31) $4 billion. Debt: $4 billion. 2000 employees. $2 million in revenue per employee. Same amount in debt per employee as revenue. A buncha employees and a server farm.
What’s the future look like for Comcast? Can’t say. For the present, they will keep on being an internet provider, but it’s very likely their segment (method) of delivering video as a subscription service will disappear, eventually. (Of course, subscribers may not wait, ever since Comcast moved their customer service off shore, it has become easier and easier to quit them, out of frustration).
Program producers are starting to figure out they can sell their services a la carte and deliver them over the net or via other unwired technology. To any kind of device.
A mentor of mine,early in my career was Stanley S Hubbard, a true broadcast pioneer. We kept corresponding long after I moved on from his employ. One of the most interesting letters he wrote me was in the early 80s, shortly after he created the first direct to home satellite broadcasting company, USSB, which he later sold to DirecTv (for more than a billion dollars). Mr. Hubbard wrote “ in the near future, there will be no need for conventional television networks or terrestrial stations, as anybody who wants to be a network will be able to send out programming from where ever they are.” Spot on target Stanley.
Yet terrestrial broadcasters keep buying out their competitors, largely a play by non-thinking private equity groups, I would guess, and hard wired delivery companies like Comcast keep buying more hard wired subscribers.
An enigma, at least to me.
I’m sure it’s been discussed somewhere in the industry, but for me, (not a millennial or gen xer), I’d just as soon purchase my video content on an a la carte basis, as I suspect most people would.
I’d be happy to pay more, proportionately, to get what I want, instead of what you think I need.
There have been a few rumbles about it publicly lately, but for the life of me, I don’t understand why powerhouses like HBO, SHO, and ESPN don’t dump their current distribution deals, launch out on their own, become platform agnostic, and keep all the money. I suspect Wall Street would forgive any temporary wobble caused by the transition.
cut the cable