Entering the seventh month of its carriage dispute with Viacom, Cable One said its video business has “less value and emphasis,” indicating that the small-market operator may be contemplating exiting from or at least downplaying its video business.
Cable One ended the third quarter with 476,233 basic-video customers, a loss of about 14,076 subscribers. That is a slight improvement over the 14,643 basic-video subscribers it lost in the third quarter last year and vastly better than the 34,000 it lost in the second quarter of this year.
Cable One threw down the programming- cost gauntlet on April 1, opting not to accept a carriage proposal from Viacom that it believed was too costly. As a result, 15 Viacom-owned networks — including MTV, Nickelodeon and Comedy Central — went dark to Cable One customers in about 19 states.
Cable One at the time said it did not believe its customers valued the Viacom channels so highly.
While the third-quarter results could indicate subscriber losses are beginning to level off, Cable One said the video customer count is down about 15% since the third quarter of 2013, and said the video business is not as desirable as it used to be.
“Due to rapidly rising programming costs and shrinking margins, video sales now have less value and emphasis,” Cable One owner Graham Holdings said, noting that “programming costs have been reduced significantly.”
Cable One spokeswoman Patricia Niemann did not return calls for comment by press time.
Cable One, operating in markets such as Odessa, Texas, and Winslow, Ariz., has been de-emphasizing video for years: one of its most popular packages bundles about 50 channels with high-speed Internet.
Companies like it and Seattle-based Wave Broadband are focusing less on video programming and more on building gateways to let customers tap into over-the-top services, including Netflix, via their home DVRs.
Pivotal Research Group principal and senior media and communications analyst Jeff Wlodarczak said that for smaller operators, making video a lower priority is almost inevitable.
“Scale matters in cable,” he said, and some smaller operators might be hoping to get swooped up in the consolidation wave that is expected after the Comcast-Time Warner Cable merger is completed next year.
“I don’t think it is, frankly, a great idea to get out of the video business, but smaller operators such as Cable One are in between a rock and hard place,” Wlodarczak said. “If they push back and stop carrying programming, they run the risk of losing their high per-capita income video subscriber. If they don’t [push back], they will have to continue to raise their video prices and lose their more price-sensitive pay TV subscriber to alternatives. If I were a small cable player, your best move right now, before you lose a material percentage of your video subscribers, is to sell out.”
