Wednesday, March 11, 2015

Could Cable Network Drops Become Permanent?

The cycle of cable network drops with license fee negotiations leading to eventual relaunch could soon be over.  The threat of cord cutting, the high license fees imposed by cable nets, and the desire to keep subscription prices in check could lead to cable operators dropping cable nets from their line-up, permanently. 

Viacom's networks, MTV, VH1, Comedy Central and others were dropped from Suddenlink in October, almost 6 months ago, without the cable operator losing a significant number of subscribers.  Given the savings and limited loss of revenue, Suddenlink may be in no hurry to relaunch Viacom networks.  The latest news is that Verizon's FIOS systems have decided to not renew The Weather Channel, replacing it with a more inexpensive weather service.  Should FIOS find this move to be financially successful, it too could appear to become permanent.

Given the rise of streaming services, the accessibility of network programming outside its TV line-up, and the need by cable operators to create lower priced, smaller packages of cable networks to limit cord cutting, some cable networks may be at risk of also being dropped from cable systems.  If Suddenlink and FIOS can demonstrate that they can drop nets, maintain their subscription penetration, while improving their net profits, the cycle of launch, negotiate, drop, re-launch may have finally be broke.  Should cable network drops become permanent, don't be surprised to see these same networks follow the HBO Now strategy of offering streaming subscription packages outside the cable line-up universe. 

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