What Happens When Networks Cut The Cord?

For the past five years, one of the hottest discussions in media has been cord cutting and the frequency with which people are cutting their traditional cable subscriptions in exchange for internet or wireless options that are cheaper, or even better, FREE. There are any number of reasons why people continue trading in the “one big price for 500 channels” model for a vastly cheaper, more customized offering and CBS just decided to add a new one.

Last weekend, in the midst of a contract dispute between CBS and AT&T, CBS went dark on DirecTV, DirecTV Now and U-Verse in some of the country’s largest markets. More than 6.6 million AT&T customers in New York, Los Angeles, Chicago, Dallas, San Francisco, Seattle, Tampa, Minneapolis, Miami, Detroit and Denver tuned in to watch “Big Brother,” “The Late Show with Stephen Colbert,” “Love Island,” “The Young & The Restless” and the newly launched “CBS Evening News with Norah O’Donnell” but all they got was a blank screen with an apology note from DirecTV.

In response, AT&T directed customers to tvpromise.att.com/cbs where they tried to explain why they are standing firm in their negotiations. According to the website:

“CBS senior executives have been boasting to Wall Street about new “all-time highs” in operating income and revenue. At the same time, CBS has hit cable and satellite TV providers and local station affiliates with $1.6 billion in fees the past year. These fees are expected to soar nearly 60 percent to $2.5 billion in the next 18 months.”

The truth is neither side seems overly concerned about the viewer stuck in the middle, or their anger over billionaires fighting with billionaires. Customers just want to be able to watch the channels they pay for and the fact that more than 200 U.S. markets have experienced similar blackouts since January doesn’t offer a lot of hope that this one will be the last.

The bigger question is what’s going to happen when the bigger players all decide they’re going to take their balls and go home?

Since the rise of Netflix, there has been a massive corporate stampede to control content with the intent of creating entertainment beacons viewers won’t be able to ignore. That’s why AT&T paid $102 billion for Time Warner and all of the HBO assets. It’s why Disney just paid $85 billion for 21st Century Fox in preparation for its Disney+ subscription. In the near future, if you want to watch anything Disney, Marvel, Star Wars, Pixar, ESPN Sports or anything in the Fox library, you’ll have to have a subscription. Will it work? The fact that Disney stock has jumped 30% in the past six months suggests shareholders think it will.

Likewise, AT&T has been shifting its attention to its WarnerMedia business and a rollout of a Netflix-like app called HBOMax that will include HBO assets (many of the greatest television shows ever produced like “The Sopranos,” “The Wire” and “Game of Thrones”) as well as shows like “Friends” that Warner just took back from Netflix.

What’s intriguing is how viewers, and cord cutters specifically, will react when they are forced to purchase more and more and more subscriptions to access the content they want. Cord cutters moved away from subscription-based cable because it was too expensive, but at least those services served up all the content they wanted in the same place within an easily useable, searchable framework. Will any of this matter? We’ll see.

At least when everyone is putting out their own content, they won’t have anyone to argue with but themselves.

AIMEE BOVÉ is the Director of Media at LOOMIS, the country’s leading challenger brand advertising agency and a top Dallas advertising agency for digital, social, mobile and user experience. For more about challenger branding, advertising and marketing, leadership, culture and other inspirations that will drive your success, visit our blog BARK! The Voice of the Underdog and catch up on all of our posts.

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