The Disruption of Cable TV
The cable TV industry is undergoing a seismic shift, with streaming services and changing viewing habits challenging its traditional dominance. Recent events, such as the Disney-Charter Communications standoff and Warner Bros. Discovery’s CNN Max launch, highlight the industry’s struggle to adapt.
Disney vs. Charter: A Tense Standoff
Earlier this year, a public dispute between Disney and Charter Communications left Charter customers without access to Disney channels, including ESPN. Disney’s strategy of prioritizing streaming platforms over cable raised concerns, but the two companies eventually reached an agreement, signaling a turning point.
“We’ve always thought about the video business as being an asset to our broadband connectivity business,” Winfrey told a Goldman Sachs conference early last month. “And I think it’s on the verge of flipping, where it’s becoming a liability.”
“Our collective goal has always been to build an innovative model for the future,” Iger and Winfrey said in a joint statement at the time. “This deal recognizes both the continued value of linear television and the growing popularity of streaming services, while addressing the evolving needs of our consumers.”
“The media companies were blatantly double-dipping,” Craig Moffett, a MoffettNathanson cable industry analyst, told Reuters. “Going forward, you’re not going to be able to simultaneously charge the same customer twice for the same content.”
A New Era of Collaboration
The Disney-Charter deal represents a shift in the industry’s approach. Disney’s willingness to offer wholesale access to its streaming services, like Disney+, signifies a recognition of streaming’s importance. TV companies are now looking to create bundles that combine linear offerings with streaming to simplify and offer cost-effective options.
The Decline of Cable Bundles
Distributors are no longer incentivized to offer cable bundles as they derive more revenue from services like broadband internet. As a result, they push back against TV companies. DirecTV recently warned Warner Bros. Discovery about potential contract violations with the launch of CNN Max, a streaming channel simulcasting CNN’s cable content.
Warner Bros. Discovery’s Smart Move
Warner Bros. Discovery’s Max platform offers a broad range of content, acknowledging the value of news, sports, and entertainment to consumers. This move aligns with CEO David Zaslav’s vision for the platform. CNN had previously attempted streaming with CNN+, which was short-lived due to contractual constraints.
Treading a Fine Line
TV companies must balance developing streaming platforms with maintaining lucrative cable contracts. Changing viewer habits and cord-cutting trends are reshaping the industry. While the cable bundle will gradually decline, a significant portion of the older population will likely retain cable subscriptions, ensuring the industry’s continued profitability.
In conclusion, the cable TV landscape is evolving rapidly, and TV companies must adapt to a new era dominated by streaming services and changing consumer preferences.