I dumped my cable company. I no longer get ESPN, CNN, FOX or MSNBC.
A couple of years ago, the very idea would have been unthinkable. But when I wrote my check to the cable company last month (about $100 for 300-400 channels, of which I watched two or three), I began to review how my wife and I actually consume television.
At the same time, I saw that a new crop of digital antennas had dropped in price to around $40. I picked up one at Costco as an experiment and hooked it up to the TV in my den. It scanned the channels and picked up all the local channels (affiliates of ABC, NBC, CBS, PBS and Fox). Within just a couple of minutes, I had the antenna in a position (well out of sight) where everything came in with clear HD signals. I already had Roku boxes on all my sets, giving me access to Netflix, Amazon Prime and plenty of channels for news, sports and weather.
Then I remembered that my cable package included a promotion that was about expire, and my bill was about to go up $30. The idea of paying $130 a month for three or four channels seemed insane. Could I afford it? Sure. But it hit my choke point, at which something inside me rebelled.
I called my cable provider and asked about downgrading to a lower package. They said if I did, I’d lose my promotional deal and the price would actually go up $15 a month. I posted something snarky about it on social media, and a surprising number of friends told me they’d already been living happily without cable. Contrary to what you may believe, these weren’t just Millennials, but also middle-aged professionals.
If you do a Google News search on “cord cutting,” you will quickly find a lot of recent articles from Forbes, The Wall Street Journal and USA Today, among others. Most agree that the cable TV model of bundling – forcing customers to buy hundreds of channels rather than just allowing them to buy what they actually want – is living on borrowed time.
By most accounts, the cable companies are losing customers. As reported by Bloomberg, the total number of cable subscribers dropped for the first time in 2013. Cable advocates counter that the numbers of those leaving cable are still small. However, we have to count not only those who cut existing cable service, but also those (primarily Millennials) who never had it in the first place.
There is evidence that some of the content providers are getting restless. HBO has announced that it will sell directly to users soon, and CBS has begun offering its programming for a few dollars a month over the Internet.
But the big thing people can’t give up is sports – ESPN in particular – and we’ve seen no movement on their part. Bob Iger, CEO of Disney (which owns ESPN) has said that marketing directly to consumers is a good concept, and Disney’s prepared to do so.
But he’s in no hurry, because once ESPN goes, cable users could begin to drop out quickly. For now, Disney/ESPN gets $6.04 per month per subscriber from the cable companies, and Disney will milk that cash cow as long as it can. (To get an idea just how big a factor ESPN is, compare that with the runner-up, for which the cable companies pay $1.48 per subscriber per month. The WSJ estimates that the median is a meager 14 cents, which gives us a good idea of how much junk there is in that 400-channel package.
In short, Disney has the cable providers by the throat. They could break up the entire system. On the other hand, they could also simply double their charges to the cable companies and probably make more money.
Despite all this, I’m not convinced that the entire cable system is on the verge of collapse. The inevitable isn’t necessarily imminent. My guess is that we’ll see some movement by the cable companies to offer smaller packages, ratcheting down to preserve as much of the revenue as they can for as long as possible, while continuing to plug the technology holes.
On the other hand, if Iger and Disney pull the plug, things could deteriorate very quickly, and cable companies could end up allowing us to pick and choose our channels, paying only for the ones we actually want.