If you are a cable company or a broadcaster like Comcast (Nasdaq: CMCSA ) , Mediacom Communications (Nasdaq: MCCC ) , or Charter Communications (Nasdaq: CHTR ) , your subscribers are the only thing keeping you in business. Until satellite television providers like DIRECTV (NYSE: DTV ) and Dish Network (Nasdaq: DISH ) came on the scene, cable had a near-monopoly for content delivery, which kept customers plentiful.
But since the satellite armies have stormed the walls, competition is very real, and cable needs a way to distinguish its service, lest it lose those precious subscribers.
That's exactly what appears to be happening at Comcast. Roughly 275,000 video subscribers severed their cable relationship this past quarter, and 622,000 year-to-date. The company blames these losses on the weak economy, transition to broadcast digital, customers bailing after discount promotions ended, and "continued competitive pressures."
I'm willing to buy that a few folks dumped cable in exchange for just getting the networks on their rabbit-ear antennae. I'll even believe that once discounts ended, customers moved on. But I'm placing my biggest bet that Comcast simply isn't keeping up with the marketing juggernaut that is DIRECTV.
We'll know more about whether my theory holds up when DIRECTV and DISH report their earnings. I expect DIRECTV's subscribers to increase again, and DISH to be flat to down.
Almost every American is used to watching infinite channels from cable service. In tough times, the cheapest entertainment they'll get is in-home. A company doesn't lose 622,000 subscribers this way, or from the transition to digital broadcast (puh-lease!), or because discount promotions run their course. A cable company loses subscribers because DIRECTV is on fire. It has good commercials, good service, great packages, and NFL Sunday Ticket.
Also, consumers have long memories. Do you know anyone who says they LOVE their cable provider? They remember the days of no choice. Now they have a choice, and I think I know where they're going.