Cable-TV Networks See a Ray of Hope Amid the Cord-Cutting Clouds

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The PlayStation logo looms during the E3 Electronic Entertainment Expo in Los Angeles on Wednesday.
The PlayStation logo looms during the E3 Electronic Entertainment Expo in Los Angeles on Wednesday. Credit: Patrick T. Fallon/Bloomberg News

The bleak picture for cable TV networks industry looks a little less dire now that researchers are getting a better handle on sign-ups for online TV packages like Sling TV and PlayStation Vue.

Internet-based, cable-like services now have at least 1.3 million customers and are still growing, according to data released this month from Nielsen, which began counting such subscribers in January. With those subscriptions, the total number of households with some sort of multi-channel TV service, online or via cable or satellite, reached 97.6 million this month, up 68,000 from the May estimate, Nielsen said. That's on top of growth of 261,000 subscribers from April to May.

The total number is still a decline of 2.4% from a year ago, the more usual point of comparison. And because Nielsen is gradually adding online services to its total, the figures may just reflect an adjustment in the data rather than actual industry growth. But Nielsen's data do support the argument by cable networks such as ESPN that Sling, PlayStation Vue and their ilk will help make up for at least some of the loss of cable and satellite customers.

Investors in media stocks have been focused over the past two years on the monthly cable-TV subscriber numbers put out by Nielsen, and the numbers haven't looked good. Big cable channels like ESPN, MTV and TBS have lost millions of subscribers, and with them the lucrative monthly fees that TV distributors pay the networks for the programming. TV networks reversing those losses would be welcome news for the industry.

Nielsen said in a newsletter it put out this month that its tally doesn't reflect the full number of online TV subscribers and that it expects the figures to climb as new services launch and consumers continue to seek out the packages. AT&T introduced a new online service, DirecTV Now, late last year, and YouTube and Hulu have also rolled out similar offerings.

It's too early to call the subscriber growth reported by Nielsen a major trend, according Geetha Ranganathan, a media analyst at Bloomberg Intelligence. Still, she said, "it's definitely a positive sign."

Walt Disney Co., Time Warner and other media giants have been searching for a way to deal with a new generation of online video competitors including Netflix and Amazon. Many consumers have canceled their pay-TV subscriptions in favor of online viewing, while younger viewers haven't subscribed like their parents did.

"Cancelled cable 2 mths ago, 2 kids haven't noticed, 1 just realized this week," the social media personality Kelly Oxford said on Twitter Wednesday. "As a kid I would have noticed within 1hr and died. New gen."

Disney has been more aggressive about getting its channels into new services, such as the ones being launched by Hulu and YouTube, CEO Bob Iger told investors in May.

"Right now, they are a small part of the pay-TV universe, but we believe they'll be a much bigger part of the business going forward," Iger said. "And from a per-sub pricing standpoint, these new services are just as valuable to us as traditional platforms."

-- Bloomberg News

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