Cutting the Cord – Who is Exposed?

Cutting the Cord

Cable TV subscription bundles (and the large monthly bills that accompany them) are on the decline in the United States. The main proponent of this decline has been “cord-cutting” or the replacement of a traditional cable provider with à la carte TV or streaming-based television services.

Cord-cutting services aim to solve the widespread problem for consumers who pay for hundreds of channels, but actually watch only a small portion of them.

A la carte TV is becoming increasingly popular and services like Amazon ($AMZN), Netflix ($NFLX) and Hulu now provide subscribers with full access to TV and movie catalogs. Larger corporations and media outlets have already adapted for cord cutters: CBS ($CBS) offers a streaming service, HBO ($TWX) NOW allows live streaming of their content and the NFL has just released an all access pass to stream any NFL game immediately after its conclusion.[1]

Recent statistics underscore the magnitude of the impact that cord-cutters are having on the traditional cable business.[2] The growth in cord-cutting had caused 1.4 million U.S. households to either cancel or opt out of pay TV in 2014.[3] This number is only accelerating with an estimated 566,000 cutting the cord in the second quarter of 2015 alone.[4]

Using AlphaSense, we can answer the following questions: What companies are affected by this (negatively or positively)? How are they positioning themselves for the future? Interestingly, the answers to these questions are overwhelmingly located in conference call transcripts rather than documents (filings, investor presentations or press releases) released directly by the corporations.

Not surprisingly, many of the conversations surrounding cord-cutting for cable provider firms have been negative as cable providers come under fire by sell-side analysts during conference call Q&A sessions.

Here are a few notable examples of the responses companies have been providing on the topic:

Cable Providers

  • AT&T Inc ($T) – Analyst Meeting Transcript, August 12, 2015
    “We do anticipate cord shaving to begin to even accelerate.”
  • Cablevision Systems Corp ($CVC) – Earnings Call Transcript, November 6, 2014
    “Ultimately, cord-cutting and going to over-the-top is something that we do believe is going to happen, and we are preparing ourselves for it.”

Media Asset Owners

  • CBS Corp ($CBS) – Conference Transcript, December 8, 2014
    “First, people are downgrading their television choices by cutting the cord or switching to a … broadband only status, which you would expect to lower overall television viewing levels.”
    “Another 18% of the decline is from those new broadband only homes.”
  • E.W. Scripps Company ($SSP) – Earnings Call Transcript, August 7, 2015
    “Anybody that is concerned with cord-cutting … broadcasters, and in particular Scripps, is a haven and a place to go.”

Related Technology & Services

  • Cindedigm ($IQ5) – Earnings Call Transcript, August 12, 2015
    “The giant old media companies lost over $80 billion in market value last week because cord-cutting is happening faster than many old-school executives ever believed it would. Those less flexible, large entertainment companies still tied to old media distribution are now scrambling to figure out what to do in the face of this seismic shift in consumer viewing.”
  • MaxLinear Inc ($MXL) – Earnings Call Transcript, February 6, 2014
    “I think we are very well positioned in the next medium-term or longer-term that we can see, as long as the broadband connections are coming over cable, with the current products to be able to take advantage of the cutting the cord phenomenon.”
  • Rocket Fuel Inc ($FUEL) – Earnings Call Transcript, May 8, 2014
    Large advertisers are interested in the big theme for advertising this year, TV dollars going digital and consumer cord cutting.”

A search for “cord cutting” OR “cord shaving” across all document types including transcripts, press releases, filings and investor relations presentations on AlphaSense returned results in 2 seconds. My saved searches automatically notify me via email as soon as any other documents are filed that match my search criteria. No other service allows you to conduct research as quickly, easily and as thoroughly as AlphaSense.

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1. “NFL Game Pass gives cord-cutters a new option.”
2. “Cord-cutting accelerates in first 3 months of 2015.” USA Today.
3. “Cord-Cutting Picks Up: 1.4 Million U.S. Households Tuned Out Pay TV in 2014.”
4. “Cord-Cutting Gets Ugly: U.S. Pay-TV Sector Drops 566,000 Customers in Q2.”