Losses Continue to Pile Up for US Cable Companies as Cord-Cutting Skyrockets

It might be another nail in the coffin for Bill C-11 supporters. Cord cutting continues to be a huge issue for US cable companies.

Throughout the debate surrounding Bill C-11 – now known as the Online Streaming Act – one argument supporters floated was this idea that American TV companies were making huge money these days. This as Canadian TV companies continue to see losses because there is apparently insufficient regulations to help them out (I know, why not just create good quality content?). With this growing tide of American culture somehow prospering and travelling across the border, supporters claim, Canadian culture will somehow be drowned out.

Even worse, according to these supporters, US television companies are increasingly going exclusive on their streaming platforms, meaning that Canadian TV companies can’t rebroadcast American programming. You know, for the purpose of telling Canadian stories. It requires the rebroadcasting of a lot of American programming, otherwise those good wholesome Canadian stories can’t be told… or something.

If the arguments above don’t make any sense to you, well, it shouldn’t. It’s utter nonsense. For those who think I’m exaggerating when I suggest that these are really the arguments of supporters, well, it’s not hard to find these sources by any stretch of the imagination. So, yes, these are real arguments by real supporters of the Online Streaming Act.

Part of the mythology pushed by supporters of the Online Streaming Act is that the US television companies are making money hand over fist and it’s really up to the Canadian government to get that money and hand it back over to Canadian companies who are hurting as a result of these US based streaming companies making all this good quality content (hint?). Well, last month, that myth got put into serious question when the losses for many of the streaming services targeted by the Online Streaming Act collectively lost $5 billion in total. This is far from the money making cash cow envisioned by supporters of the legislation.

Adding to the problems of the bills supporters is that these supporters also often are supporters of the Online News Act. The massive windfall they were expecting to come out of the Online News Act simply never materialized as the government caved to Google and handed the web giant everything in a desperate bid to land a deal of any kind and avert disaster for the large Canadian publishing companies. The $100 million. While it sounds like a large number on paper, that number is nowhere near what the big media companies were needing to counter the estimated $230 million in losses incurred when Meta dropped news links last year. Even worse, the big media sector needed an estimated $1 billion for financial stability. $100 million is, at best, a mere 10% of what they were likely hoping to get out of this.

That put significantly more pressure on the Online Streaming Act. The companies are likely seeking an estimated $900 million or possibly $1.07 billion if you include the overall losses incurred by the Online News Act. Instead, it is starting to look increasingly likely that some streaming platforms might rather simply exit the Canadian market rather than pay the ransom payments for the privilege of continuing to do business in Canada. That is, after all, one of the themes some of these streaming services are expressing during the CRTC hearings. If they are being expected to simply take the investments they are already making in Canada and give it to the legacy media companies, then that increases the cost of doing business during a time when additional funding may be something they don’t have to spare after all. The math, for them, doesn’t make any sense.

Now, we learned of another report that is only adding to this trend of reports saying that US television companies aren’t exactly raking in the money as originally purported by the Online Streaming Act supporters. A report by Karl Bode of Techdirt notes that cord cutting is continuing at a record setting pace, cutting in to the traditional media companies bottom line south of the border. From Techdirt:

Back in 2019, Charter CEO Tom Rutledge proudly declared that the trend of cord cutting — or people ditching traditional cable television and switching to streaming — was finally coming to an end. According to Rutledge, the worst was now behind the cable industry, and the trend was finally slowing down.

Yeah, about that.

According to analysis from Wall Street research firm MoffettNathanson, the U.S. pay TV business had its worst third-quarter in history with roughly 889,000 cable TV subscribers cutting the cord. All told, traditional cable, satellite and telco TV providers lost 11.7% of their total subscribers year over year, and the phenomenon shows absolutely no sign of slowing down.

Live TV, in general, isn’t doing very well, including live streaming services like Sling TV or YouTube TV, which offer a rotating platter of live TV channels via the internet. In fact, MoffettNathanson found that only 21.7% of cord cutters signed up for a live streaming TV service (also known as vMVPDs) in the third quarter, a drop from 31% a share one year earlier.

All told, the idea of traditional, ad-based live television simply doesn’t interest a growing share of Americans, especially the younger ones.

This kind of reporting coming from the US should terrify supporters of both the Online News Act and the Online Streaming Act. Many of these supporters are using the Online Streaming Act as a backup to their failed Online News Act as a way of recouping the losses from the Online News Act and make up some of the lost ground for the Canadian government not delivering what they were hoping. Instead, it is looking like they have gone running to an empty well hoping for water to be practically gushing out of the ground.

What’s even more problematic for them is the fact that if the Online News Act happens to be a bust as well, there is no real backup plan to this backup plan. The only real source of added funding is going to come from the Canadian government itself. Indeed, the government is ramping up their bailouts of the Canadian media sector. It’s nowhere near a perfect solution for them, but it may end up being the only source of funding left that might actually make a positive difference to them. The third prong on the Canadian governments war on the open internet, the Online Harms bill, isn’t even tabled. Even then, it is not expected to offer any additional financial windfall for these companies in the first place.

Simply put, if a large majority of the streaming companies decide to pack up and go home once the Online Streaming Act is implemented, the media companies are completely screwed. Even worse, they’ll have to deal with questions of why they drove so many streaming services out of the country in the process. All because of a failed attempt to score some easy cash out of them in the first place. It was already hugely controversial when the then-called CRIA (Canadian Recording Industry Association) drove Pandora out of Canada many years ago, I can only imagine the flack media companies would get if they end up driving services like Disney+ and Paramount+ out of the countriy now that some of these services have become even more popular than Pandora in this country.

Indeed, there may be a few of the largest streaming platforms willing to part ways with some of their cash. Netflix and YouTube, for instance, might be able to reach the high cost of entry. Others, however, well, not so much. Whatever the media companies hope to get out of the very few largest ones that stay, it likely won’t be anywhere near enough to make up for what they were hoping to get elsewhere. At that point, the media companies will start running out of options to satisfy their greed.

Drew Wilson on Twitter: @icecube85 and Facebook.

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