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Media/Telecom

Forget Cord-Cutting. Big Threat to Cable Is Disappearing TV Profits

The threat that TV subscribers will cut the cord on their cable service has dominated discussion about TV’s future in recent years. But what isn’t widely appreciated is that rising programming costs could force cable operators out of the TV business within the next decade, well before cord-cutting does.

Cable firms would be fine, as they make a lot of money from selling broadband—already some people buy only broadband from them. But it would have far-reaching ramifications for the major entertainment companies that make much of their profits selling channels to cable and satellite firms. It is almost certainly one reason why Disney and others are launching streaming services, preparing for a world where they will have to sell channels like ESPN directly to consumers instead of going through cable and satellite firms. But in that world, those companies will have a tough time replicating their existing profits.

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