Most analysts are predicting this past year will be the worst yet for video customer losses, with nearly two million cable TV customers cutting the cord in 2019, up from 1.26 million in 2018. Business is even worse for satellite TV operators, which lost 1.2 million customers in 2018 and are expected to have shed another 3.25 million customers in 2019 — mostly because of mass customer defections at AT&T’s DirecTV. Altogether, over five million Americans are estimated to have cut the cord over the past year.

Investors have largely stopped worrying about video subscriber losses, and cable operators have boldly told Wall Street they have stopped chasing video customers threatening to cancel service, claiming many are no longer profitable enough to keep. Their key competitors, online streaming video services like Sling TV, AT&T TV Now, and Hulu with Live TV are also seeing subscriber gains slowing, most likely because of price increases. One analyst predicted these online cable TV replacements would add a combined 804,000 customers in 2019, less than half of the 2.3 million they added in 2018.

Cable companies seem unfazed, in part because of record-breaking gains they are expected to have made in internet and wireless customers in the last year. One analyst suggests that most of those gains are coming directly at the expense of phone companies.

Comcast and Charter are the two largest cable companies in the United States.

“Cable’s clear speed advantage in roughly half the U.S. is driving continued strong share performance,” Jayant told clients in a research note. Jayant expects some of the biggest gains will come from ex-DSL customers in Comcast and Charter Spectrum’s service areas.

Nationwide, cable operators likely added 3.1 million new broadband customers in 2019, up 15% over last year. Phone companies are predicted to have lost at least 402,000 internet customers, up from 342,000 in 2018. Most of those departing customers are not served by fiber broadband.

Both Comcast and Charter Spectrum are also successfully attracting a growing number of mobile customers, as is Altice USA. Charter and Comcast offer their broadband customers the option of signing up for wireless mobile service, powered by Verizon Wireless. Altice USA resells Sprint service at cut-rate prices.

Comcast is estimated to have added 778,000 wireless customers in 2019 and analysts predict that the company will add another 909,000 in 2020. Charter Spectrum is expected to have gained 923,000 wireless customers in 2019, with another 1.04 million likely to sign up in 2020. Altice USA’s deal with Sprint in its Cablevision/Optimum service area has already attracted about 80,000 customers, with 550,000 more likely to follow in 2020.

The era of fierce competition among live streamed video providers that has fueled cord-cutting will face new challenges as providers cope with rising programming costs and some may exit the business.

Last week, Sony’s PlayStation Vue announced it was planning to cease service in early 2020 because it was not profitable for the game console manufacturer. But Cowen analyst Gregory Williams believes it won’t be the last to close its doors.

Williams told Multichannel News that despite the growing phenomenon of cord-cutting, new streaming subscriptions are slowing down as subscribers choose between a half-dozen major services that are all raising prices, including AT&T TV Now, fuboTV, Hulu Live TV, Philo, Sling TV, and YouTube TV. Williams called the current marketplace for streaming services irrational in the business sense, because providers are at the mercy of programmers that are continuing to raise wholesale prices.

Another serious problem is price disparity. Programmers offer huge volume discounts to large cable, satellite, and telco TV providers, charging smaller streaming services considerably more. That could eventually bring streaming subscription prices to parity with the same traditional cable and satellite providers many consumers left looking for a better deal. Exploring fun options like slot gacor gampang menang can offer a rewarding break from these rising costs.

Most streaming TV providers have built business models on slimmed-down packages of channels, rejecting the difficult-to-negotiate a-la-carte “choose your own channels” model many customers have been asking for since the days of 100 channel cable TV lineups. As a result, consumers are still paying for lots of channels they do not watch or want, and as subscription costs advance beyond the $50 a month many services are now charging for a healthy package of most popular cable and broadcast networks, some subscribers may end up going back to their old providers.

Ironically, one of the few a-la-carte providers available is a very large cable company you may already know. Charter’s Spectrum has been quietly selling TV Choice, a package of 10 ‘you-pick’ networks (mostly a part of Spectrum’s Standard TV package) combined with C-SPAN, public, educational, and government access channels, home shopping, and local over-the-air stations, to its internet-only customers for $24.95 a month (not including a $6/mo Broadcast TV Fee and an extra $4.95 a month for a cloud-based DVR service). The resulting bill of around $35-40 a month is at least $10 less than many streaming service providers that may not offer the exact channel lineup you are looking for.

The closest alternative is Sling TV, which has very slim packages of networks in three different configurations, ranging from $15-25 a month. But chances are, some channels you watch won’t be included.

Williams predicts that just three to five services will survive the consolidation wave or exit that is expected to be triggered by Sony’s decision to leave the marketplace. The services most vulnerable are likely those lacking a deep-pocketed, healthy corporate backer or those with the least market share.

An executive for one of PlayStation Vue’s rivals told Multichannel News Sony faced platform costs that “were simply too high.” Sony paid broadcast retransmission consent fees to local stations in every market the service was offered and also licensed popular, but very expensive regional sports channels. Sony also outsourced its streaming technology to Disney-owned BAMTech, among the more expensive platform providers.

Sling TV, one of the first online streaming alternatives to cable television, is slashing prices by 40% for the first three months to attract more subscribers.

Sling’s basic plans are now priced at $15 a month, with more deluxe tiers available for $25 a month for new customers.

As competitors pick up new customers, a significant number are coming from Sling TV, which is known for having one of the smallest channel lineups in the streaming industry, and DirecTV Now, which has been raising prices. To protect its flank, Sling TV is cutting prices to win back old customers and attract new ones.

Sling still has the biggest customer base among streamers with an estimated 2.42 million customers at the end of 2018. But other providers are catching up:

• Sling TV: Has 2.42 million customers, but added less than 50,000 new customers in the last quarter of 2018.
• YouTube TV: Estimated at 1 million subscribers, picking up 400,000 new customers in the fourth quarter of 2018.
• Hulu TV: Now up to 1 million customers, Hulu added 500,000 new customers in the last three months of 2018.
• DirecTV Now: Lost 267,000 subscribers in the fourth quarter, ending 2018 with 1.6 million subscribers, down from 1.86 million as of Sept. 30.

More than 2.5 million HBO and Cinemax customers are blacked out after AT&T cut off its biggest satellite rival Dish Networks and streaming provider Sling TV in a dispute the Department of Justice claims confirms its concerns that AT&T’s merger with Time Warner (Entertainment) would be bad for consumers.

It is the first time HBO has faced a contract renewal blackout on any platform in its 46-year history. But some groups feel it was predictable, considering AT&T owns DirecTV, Dish’s biggest rival. AT&T acquired HBO’s parent company, Time Warner (Entertainment) in 2018, changing its name to WarnerMedia. Last summer, Judge Richard J. Leon, senior district judge on the U.S. District Court for the District of Columbia gave AT&T approval of that $85 billion merger deal with no conditions, scoffing at Department of Justice claims that the merger would give AT&T undue market power that could be used to threaten competitors by depriving them access to popular cable networks and content or use of those networks in marketing materials to attract new subscribers.

As the DoJ pursues an appeal of Judge Leon’s decision, this week’s blackout seems to add ammunition to the government’s case against the merger.

“This behavior, unfortunately, is consistent with what the Department of Justice predicted would result from the merger,” a DoJ representative told Reuters. “We are hopeful the Court of Appeals will correct the errors of the District Court.”

A statement from Dish Networks harmoniously echoed the government’s position.

“Plain and simple, the merger created for AT&T immense power over consumers,” said Andy LeCuyer, senior vice president of programming at Dish, in a statement. “It seems AT&T is implementing a new strategy to shut off its recently acquired content from other distributors.”

Consumer groups like Public Knowledge also agree.

“In opposing the AT&T/Time Warner deal, opponents — including the Department of Justice — predicted that the newly combined company would have the incentive to withhold content, and would gain stronger leverage in negotiations like this one, ” said John Bergmayer, senior counsel at Public Knowledge. “AT&T stands to benefit if customers, frustrated by missing their favorite HBO shows, leave DISH to switch to DirecTV. Time Warner, as an independent company, did not have the incentive to hold out on HBO content in these situations before the merger. Now, consumers are the ones paying the price.”

Dish is accusing AT&T of demanding the satellite service pay for a guaranteed number of subscribers, regardless of how many consumers actually want to subscribe to HBO.

“AT&T is stacking the deck with free-for-life offerings to wireless customers and slashed prices on streaming services, effectively trying to force Dish to subsidize HBO on AT&T’s platforms,” said LeCuyer. “This is the exact anticompetitive behavior that critics of the AT&T-Time Warner merger warned us about. Every pay-TV company should be concerned. Rather than trying to force consumers onto their platforms, we suggest that AT&T try to achieve its financial goals through simple economics: if consumers want your product, they’ll pay for it. We hope AT&T will reconsider its demands and help us reach a swift, fair resolution.”

On its face, the nationwide blackout of HBO and Cinemax on America’s second largest satellite TV provider could be a public relations disaster for AT&T, depriving customers from accessing premium movie networks for the first time. But AT&T is fighting back in a coordinated media pushback.

In its defense, HBO is claiming Dish was not negotiating in good faith. Simon Sutton, HBO’s president and chief revenue officer: “Dish’s proposals and actions made it clear they never intended to seriously negotiate an agreement.”

“Past behavior shows that removing services from their customers is becoming all too common a negotiating tactic for them,” echoed AT&T.

“The Department of Justice collaborated closely with Dish in its unsuccessful lawsuit to block our merger,” a WarnerMedia spokesman said in a statement. “That collaboration continues to this day with Dish’s tactical decision to drop HBO – not the other way around. DoJ failed to prove its claims about HBO at trial and then abandoned them on appeal.”

As always, customers are caught in the middle. For now. AT&T and HBO are telling consumers to drop their Dish subscriptions and stream HBO and Cinemax online directly from their respective streaming platforms, or find another provider. Dish has told its satellite and Sling TV customers they will be credited on their bill for time they do not receive HBO or Cinemax. Dish is also offering customers a free preview of HDNET Movies.

Oral arguments for the DoJ’s appeal are scheduled to begin Dec. 6. Court documents revealed today the judges that will hear the appeal are: Judith W. Rogers, Robert L. Wilkins, and David B. Sentelle.

A Wall Street media analyst called today’s television model of high returns and relentless rate increases passed on to pay television customers unsustainable.

Sanford Bernstein media analyst Todd Juenger told attendees of The Independent Show (courtesy: Multichannel News) in Indianapolis that media companies expecting to profit from linear TV’s increased advertising revenue and retransmission or carriage consent fees are going to get slapped in the face soon as consumers revolt.

Juenger, like BTIG’s Rich Greenfield, is becoming increasingly pessimistic about today’s costly bundled-TV model. Juenger warns high revenue and profit expectations are only going to accelerate the growth of disruptive technologies like on-demand, online video.

Juenger notes cable and television networks never seem satisfied with the massive amounts of revenue they are already earning, and keep seeking ways to raise prices further. The TV business, Juenger notes, already enjoys some of the highest profit margins of any U.S. business in modern history.

“This is a very, very rare thing,” Juenger said. “Companies are not supposed to make that kind of money.”

Most cable networks now expect 40% annual revenue increases and a 30% return on capital, which is what causes runaway programming rate increases to be passed on year after year to consumers. Yet the quality of those networks has not significantly improved in many cases, and consumers are gradually shifting away from watching live television (and the commercials that accompany it).

Viewers, starting with younger generations, are increasingly ditching linear-live television and finding on-demand content to be more appealing. Much of that viewing isn’t taking place on the cable industry’s on-demand or TV Everywhere platform, which has become as littered with advertising as live television. Instead, viewers are drawn to original productions produced by Hulu, Netflix, Amazon, and other content platforms — often commercial-free, and on-demand network shows on platforms like Hulu.

“The whole reason for being for networks is called into question,” Juenger said.

Juenger dismisses the current industry trend of creating virtual online alternatives to cable television bundles — skinny or otherwise — for streaming online. Those efforts, like Sling TV, DirecTV Now, and PlayStation Vue still depend on linear television as their core product, and cord-cutters are showing a growing lack of interest in this model.

Cord-cutters and cord-nevers don’t want smaller, more economical bundles of cable networks delivered online, according to Juenger.

“I don’t think there is anybody who wants these products on an incremental basis,” Juenger said. “If the purpose of these services is to recapture subscribers that were lost, they’re not going to work.”

Viewers want an entirely new model, built around on-demand access to individual shows without viewing restrictions or having to pay for unwanted channels. Many are also willing to pay a little more to avoid commercials altogether.