Comcast loses high number of subscribers as Internet takes its toll

Comcast announced last week the loss of 275,000 basic cable TV subscribers in the third quarter of 2010. That number was larger than expected and raised fundamental questions regarding whether an increasing number of cable subscribers are cutting the cord to watch programming on the Internet.

Even with the loss of subscribers, Comcast, who is attempting to buy NBC Universal, had high earnings and revenue forecasts because it added high-speed Internet and voice customers as well as charged its TV customers more. The average cable TV bill at Comcast is now $129.75 a month, up from $107.20 in 2008.

Comcast, like other cable companies who are also losing subscribers, denied that the loss had anything to do with the Internet. The subscriber losses were blamed on the weak economy and viewers who opted instead for free, over-the-air TV. This implies that when the economy improves, the viewers will come back. Industry observers, however, are not so certain of that. As programming alternatives proliferate on the Internet, viewers have greater options and many may be leaving high-priced cable services for good.

Comcast’s loss of 275,000 basic cable subscribers was more than double the loss from the previous year’s third quarter. It was also higher than some analysts expected. For example, David C. Joyce, an analyst at Miller Tabak, forecast a decline of 221,000 subscribers. In the same quarter, the company also added 249,000 high-speed Internet customers and 228,000 voice subscribers. Craig Moffett, an analyst at Sanford C. Bernstein and Company, said the customers being lost are in the bottom half of the economy. These are people, he said, who are trying to make ends meet.

Much of the cord cutting is because cable operators have failed to provide lower-cost programming packages, Moffett told The New York Times. That’s because the owners of cable channels insist on full distribution, rather than allowing customers to pick and choose channels a la carte. The program owners also continue to raise fees.