During a wide-ranging, even soul-searching conversation on C-SPAN, American Cable Association president Matt Polka said the business of providing TV service "isn't what it used to be ... and as a business it is failing."
Polka was interviewed for C-SPAN's "Communicators" series in an episode that will air June 3, with reairings June 5 on CSPAN2. John Eggerton of Multichannel News had the first report on the interview.
"The cable business isn't what it used to be because of the high costs—the increasing costs of not only cable programming and sports programming and broadcast programming through retransmission consent—and as a business it is failing," Polka said. "It is very, very difficult in some cases for an operator to break even on the cable side," which is why broadband was so important.
Mediacom senior VP of government and public relations Tom Larsen, another interviewee, agreed, calling cable TV his company's "worst product" in terms of profitability. He expressed hope and guarded optimism that the economics could shift with less aggressive pricing from programmers, who now face dramatically more competition for viewers' attention. In particular, "reckless" spending on sports rights has been a killer, he said.
Both guests said the Trump administration could bring more balance to communications regulation overall, giving operators like Mediacom a chance to lower the costs of regulatory compliance and raise investment in plant. Larsen said he did not expect FCC chair Ajit Pai to address the all-important issue of retransmission consent anytime soon, however.
For Polka, cord cutting is the "video issue of our time," and OTT choices and flexibility are outpacing those in traditional cable. He hastened to add that cable operators are not just sitting idly by. Rather, "through on-demand, through availability of over-the-top services, as well as making sure that their broadband plant is fast enough to support a video consumer's habits," they are trying to fight back.
Asked why cable did not move to a skinny bundle model in the face of the increased over-the-top choice and control, Larsen blamed programmers.
"They would rather continue to reap the cash from that platform and grow outside of that platform with newer over-the-top providers," he said.
He said if MSOs were able to do a skinny bundle, they would be able to drop channels from their expanded-basic lineups, and programmers don't want that. Asked why the industry had not pursued an a la carte model, Polka cited the same reason Larsen had used, saying, "It is the companies that control the content and the distribution rights."
He pointed to carriage agreements that require minimum subscriber reach or charge a rate penalty. "So it is very difficult for operators to create that choice for consumers," he added.