Enter your email to read the full article.

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.

Enter your email to read the full article.

What’s included in a subscription?
Read The Information’s original, in-depth reporting and analysis
Receive as-they-happen articles via email
Talk with award-winning reporters in subscriber-only conference calls
Join the conversation on our subscriber-only Slack channel
Attend intimate, high-powered events with leaders in tech and business
Subscribe to The Information

Veterans of the industry that run big cable firms, which typically use their size to negotiate slightly lower programming costs, may feel a little less pressure to get out of TV. And they might have an emotional attachment to the business: Cable was founded selling TV, decades ago. Mr. Roberts, for instance, said last month that Comcast was “committed to the video business” but noted “we offer an attractive and profitable relationship through packaging video with broadband.” Precisely what form that video business will take, however, is what will likely change.

Jeremy Liew and Arthur P. Johnson commented on this article.
Read comments from top tech and industry leaders
Joe Lonsdale
Joe Lonsdale
Founding Partner, Eight
Chamath Palihapitiya
Chamath Palihapitiya
Founder & Managing Partner, SocialCapital
Tina Sharkey
Tina Sharkey
CEO, Brandless
Jonah Peretti
Jonah Peretti
CEO, Buzzfeed
Adam D'Angelo
Adam D'Angelo
CEO, Quora
Brit Morin
Brit Morin
Founder & CEO, Brit + CO
Dustin Moskovitz
Dustin Moskovitz
Co-Founder, Asana
Christina Miller
Christina Miller
President & General Manager, Turner
Max Levchin
Max Levchin
CEO, Affirm
Adam Mosseri
Adam Mosseri
Director of Product, Facebook
Alex Mather
Alex Mather
The Athletic
Martha Josephson
Martha Josephson
Partner, Egon Zehnder
James Murdoch
James Murdoch
Co-Chief Operating Officer, 21st Century Fox
Andrew Kortina
Andrew Kortina
Founder, Venmo
Ben Chestnut
Ben Chestnut
Co-Founder & CEO, Mailchimp
Ruchi Sanghvi
Ruchi Sanghvi
VP Operations, Dropbox
Login or Subscribe to follow the discussions happening here and real-time in our   Slack Community.
“We have declined to cross-subsidize our video business with cash flow from our higher growth, higher margin” businesses