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Summary:

There’s now even more evidence that subscribers are cutting the cord and opting out of paying for cable: By adding up subscriber losses from four of the top five cable companies, we found that more than half a million users have ditched their cable companies.

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There’s now even more evidence that subscribers are cutting the cord and opting out of paying for cable: By adding up subscriber losses from four of the top five cable companies, we found that more than half a million users have ditched their cable companies.

The carnage began last week when Comcast announced it had lost 275,000 basic cable subscribers, but it has continued as Time Warner Cable, Charter Communications and Cablevision have all reported major subscriber losses of their own.

No. 2 cable provider Time Warner Cable announced today that it shed 155,000 cable subscribers during the third quarter, which included 46,000 digital video subs. Yesterday, Charter Communications reported that it lost 63,800 basic cable subscribers during the previous quarter. And Cablevision said this morning that it shed 24,500 subscribers during the same period, including about 5,000 digital video subscribers.

Add that all together and you have more than 500,000 customers that left their cable providers last quarter, and that’s just data from four of the top five cable companies that have reported earnings. (No. 3 cable provider Cox Communications is privately held and therefore doesn’t have to announce its subscriber losses for all the world to see.) No doubt even more subscribers have left some of the smaller, non-public local and regional cable providers over the past few months.

Company 3Q Sub Losses
Comcast 275,000
Time Warner Cable 155,000
Charter 63,800
Cablevision 24,500
Total 518,300

So what can we make of this? Cable subscriber losses are obviously nothing new, and usually those losses are offset by subscriber gains at satellite and IPTV providers offering alternative pay TV services. In other words, Comcast and Time Warner Cable subscribers simply move on to become customers of Dish Network, DirecTV, Verizon or AT&T. And indeed, executives from Comcast, Time Warner Cable and others have pointed to a weak economy and increased competition as the main drivers behind their subscriber losses.

But a funny thing happened in the second quarter, when, for the first time ever, IPTV and satellite subscriber increases didn’t make up for cable losses. Cable providers lost a total of 711,000 subscribers in those three months, and 216,000 of those households did not sign up with other providers, deciding instead not to pay for multichannel video services at all.

That’s a trend we see continuing, particularly as cable subscribers continue to raise their bills at an incredible rate. Comcast reported on its earnings call that average revenue per user (ARPU) increased by 10 percent year-over-year, ending the third quarter at about $130 per month. Charter’s ARPU also rose about 9 percent, to $126. And while Cablevision’s reported average revenue per sub didn’t grow as fast as the others, it’s now a whopping $149.

All of which is why we think that the cord cutting phenomenon, which Comcast and Time Warner Cable deny is something that they’re seeing, is for real. From our point of view, expecting users to pay $125 to $150 a month, and continuing to raise those rates 5 to 10 percent every year, isn’t a sustainable business model. At some point, those users will find alternative, cheaper ways of getting the content they want, and now there are plenty of ways to do so.

For some tips on navigating life without cable, check out our new weekly video series, Cord Cutters, where we discuss the gadgets, tips and content available for those who have decided to do away with their expensive pay TV subscription.

Related content on GigaOM Pro: (subscription required)

  1. would be interesting story/data comparison to find out the subscriber loss during the last two recessions (82 and 01) in order to gauge how much subscriber loss is the economy versus alternatives.

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  2. We cut the cable after our bill continued to climb. More than happy now with an AT&T DSL dry loop for our Roku box (supplemented with free Hulu), digital OTA for PBS before school. While were planning to time-shift our current viewing, we’ve decided to to simply order a few of our favorite series on DVD post-season. We even discovered one of the broadcast TV stations has a 24-hour realtime weather and traffic. Turns out we miss cable a LOT less than we thought.

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    1. We too cut our charter service almost a year ago and have gone back to broadcast TV. We pick up about 20 high def channels off our 20yr old rooftop antennae with no need for a rotor. We get major networks (CBS,NBC,ABC,FOX) plus a host of PBS channels. Added an HD tuner to our computer for PVR capability. DSL and Netflix takes care of most everything else we might want. Like you, we really don’t miss cable – especially at the end of each month :)

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  3. Nuts… this means Internet prices from these same guys is going to rise to try and fill the hole of lost $$.

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    1. Couldn’t agree more. Like the prior commenter said – a data-only DSL line might be fine for a while to pick up the slack (telcos have a much smaller TV base to lose) for now, but the net result is still the same. Broadband providers will offset their lost content revenue with proportionately higher dumb-pipe fees. That’s the missing link for all of the “cut the cord” proponents. (No defender of Cable – but realistic).

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    2. the push to increase internet access fees will generate interesting discussion about the governments roll to keep the internet available. Several countries treat the internet as a public utility. I know the tea party would have a melt down but it would be an fun debate

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  4. It’s interesting – here in Texas there has been no inflation for nearly 3 years now, which lead my employer to not give cost of living increases during this time – yet my satellite bill (DirecTV) kept increasing. It hit $130 and we decided to cut the cord ourselves. It’s ridiculous that so much of our money should go to our “TV” bill… I’m much happier with Netflix + Hulu Plus + TIVO giving us a grand total of $35 or so…

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  5. For the sake of clarity, it’s worth noting that the 10% revenue/sub numbers they’re citing aren’t all because of price increases, they’re also because the number of services per subscriber is going up (i.e. more customers taking data and voice).

    For Time Warner Cable, for example, video revenue/sub is going to be up about 5% this year (with some of that due to more people taking DVR, HD, etc), while prices for data will be up about 2% (including more people taking higher data tiers), and telephony pricing _down_ about 2-3%.

    But, with the average customer now taking about 5% more services than last year, you get 9% growth in revenue per sub.

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    1. @Bob, you didn’t mention one key point, however, and that’s the very significant subscriber “service down-grader” trend.

      As an example, Time Warner reported that it expects to lose 1.5 million HBO pay-TV subscribers this year.

      Clearly, the whole picture isn’t apparent until you study all the related business model KPIs.

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      1. David, good point, and probably an underreported metric. Will look into a story on this sometime soon.

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  6. [...] subscribers jumped ship to the tune of 500,000+ last quarter, according to GigaOm, and for the first time in a while, GigaOm says other subscription “cable-like” [...]

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  7. An interesting point you make here, Ryan. To be clear to your readers, I am the director of digital communications at Time Warner Cable, so draw whatever conclusions you want from that.

    Adding up the lost subs from all the public cable companies and noting the discrepancies in satellite subscriber gains does tell a pretty compelling story. But I don’t doubt that cord- cutting is on the rise, I was one until about 1.5 years into my tenure at TWC. But for the premise in this post to be well-researched and truly accurate, you should really cross-reference the subscriber losses with foreclosure data from across all of “big cable’s” footprint. The housing market is continuing to implode like never before, and people are still moving in with one another, back home with their parents, and banks are still reclaiming houses. While it’s true that some folks are cutting the cord to save money, it’s also true that we can’t sell cable to an empty house. And there are a LOT of empty houses out there. I’d love to see what that relationship is in a followup post.

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    1. Jeff, Thanks for showing up and you make a fair point. I guess the bigger issue is just the assumption that pay TV subscription numbers will go up indefinitely. At over 100 million households, the market is pretty saturated already.

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      1. Ryan — no problem, man. Glad you appreciate the input. I think the larger issue is that of constant growth. At some point, we run out of households to subscribe to. All business try to grow constantly, right, but ultimately we are bound to the planet Earth and have to settle for selling to the finite number of people on it.

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    2. Appreciate you posting here. I also think the numbers don’t quite add up to the headline. Here’s one possible set of numbers:

      http://www.huffingtonpost.com/2010/04/26/number-of-vacant-homes-in_n_552274.html

      From the US Census numbers there were 19.023 Million vacant homes in the US in Q1’10 vs. 18.954 Million in Q1’09, so an increase of 69,000 vacant homes in a year.

      Of course the total pay TV market actually grew by about 862 thousand in this time frame using SNL Kagan’s numbers, so its probably not the time frame you’d want to look at. And I’m not sure where to find quarterly vacancy rates…

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  8. really good work ryan on this continuing cord-cutting subject/dynamic.

    as much as i support the future versus the past, i believe mr.simmermon of twc has a point worth researching somehow. however it sounds eerily similar to the corporate party line of it’s the bad economy, not our “f.u. customer” business practices, as wonderfully described above this post.

    haven’t paid for cable tv in 2 years, and haven’t replaced it with anything else either; wwaayyyyy outside the mainstream :).

    another aspect of this underway disruption for you and janko to focus on is the un-bundling scenario: no one cares which channel their favorite show comes from, as long as they can watch their favorite characters. and internet duistribution allows us this.

    i.e. as with songs/albums, shows/channels un-bundling will lead to a painful and vigorously protested disruption. isn;t that right mr. simmermon?

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  9. I was recently considering ordering cable service. But, when I looked over the channel listings, it struck me that they were incredibly bloated.

    I understand that cable companies need to make money. And, I understand that niche channels need to be subsidized by more popular ones, to an extent. But, it struck me as ridiculous that I’d have to buy upwards of 250 channels in order to get the 40-50 I’d actually watch.

    This low-value proposition might have flown back in the days when the cable company was the only game in town. But, that’s not the case anymore. I decided to get the bare bones package & rely on Netflix, hulu, Itunes etc. for the stuff not carried on the bare bones channels. It’s not a comprehensive solution yet. But, It’s working out PRETTY well.

    If the cable company wants more money from me, they’re simply going to have to offer more value. Ala Carte would be ideal. But, I’d settle for a “Top 100″ package.

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  10. @Robin, I don’t think Ryan can really make the point he thinks he’s making until he cross-references housing data with cable disconnects. Until then, it’s a gaping gap in his argument. I haven’t run the numbers yet myself, mind you. But it’s kind of a convenient conclusion/omission coming from a blog that has historically positioned itself as anti-cable.

    I do think that unbundling shows from channels and networks, and unbundling channels in general will be hotly protested. I know we’re against it, but I don’t think that customers will like it very much once they really think about what it means for them. This article sums it up pretty well, I think: http://www.nytimes.com/2007/11/24/business/media/24nocera.html

    While it’s true that internet distribution allows for more fragmented, niche distribution, content companies don’t make anywhere NEAR the amount of money on Web ads that they do on TV ads. And they’ve got to pay for the cost of production somehow. Shows like Mad Men aren’t going to get any cheaper to make, and the revenue’s got to come from somewhere.

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    1. I really appreciate you showing up to provide your thoughts on this matter, but I don’t think it’s fair to characterize this blog, or any other respectable tech blog, as “anti-cable.” I would argue that GigaOM, along with the tech industry in general, is simply pro-innovation (even if it means disrupting traditional businesses).

      There is a whole lot of subsidizing going on from a given content provider across their various channels/ shows, allowing for lots of sub-par content getting made in the hopes that it will resonate with some portion of customers; it amounts to affirmative action for content. It seems disingenuous to attempt to argue that broadcast technology is anywhere near as efficient as internet technology.

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  11. Would be interesting if it actually was a trend. A first-time net loss of a fraction of a percent of your customers in a down economy isn’t a trend.

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  12. Simple, Netflix + IVI, the best of both worlds, movie rental and live television! All for < $15/mo.

    I get NFL Football, I watched the World Series, and can watch all the prime-time shows live on ivi.tv, then I get Netflix for my hit movie needs. If ivi.tv adds cloud dvr I will have no need for anything but IVI plus Netflix (I have asked IVI to implement that asap :).

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  13. Cost-conscious people are wising up to the fact that cable TV is the worst entertainment value in existence. Unless one is a bedridden invalid with no social life whatsoever, watching TV 24/7, the $80-$100 monthly fee is simply not a good deal for consumers and can’t be justified. Most subscribers watch only a handful of channels out of the lineup, whatever their individual tastes may be, meaning that they are paying for a slew of content they don’t watch. Commercials inundate most channels. True, pro sports fans need their fix of games and thus are wedded to cable, but the rest of us can usually survive with Netflix and/or iTunes and/or Hulu, or no TV at all (i.e., books; music, video games).

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  14. Frank Hartranft Friday, November 5, 2010

    It would be really helpful to me if GIGAom or Cord Cutters would describe the alternatives to cable. I don’t use cable TV, but I do use cable Internet (ComCast). It’s expensive, but so is a cellular connection. I wouldn’t want satellite TV. Satellite Internet would be interesting to me if the initial capital investment in the equipment paid back (through lower rates), say within 5 years or so. An article describing the economics involved in the alternatives would save me a lot of research.

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    1. I bet you would be surprised at some of the latest packages for satellite internet. I know that MyBlueDish is currently offering free instillation, which should help you out a lot. It is also a little cheaper than other satellite internet services. I actually have an entire blog dedicated to this subject and would love for you to check it out at mybluedish.com/blog.

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  15. [...] which include data pertaining to the number of TV subscribers they’ve added or lost.  NewTeeVee reports that across the board, the cable companies cumulatively lost more than 500,000 TV subscribers in [...]

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  16. This is even more interesting in the fact that for many of us there is no real competing service. I dont own a TV and get dinged for the basic cable anyway since the cable co. is my only option for broadband delivery.

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  17. [...] cable subscribers flee by the hundreds of thousands, some cable companies are trying to find new ways to retain their customers. For Time Warner Cable [...]

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  18. Jason Williams Friday, November 5, 2010

    I just discovered ESPN on XBox Live, that breaks down another one of the factors that keeps a satellite dish on my roof. I think it keeps moving in this direction faster and faster because the competitive barrier just isn’t there. Right now I pay for my broadband and I pay for Netflix and XBox Live which gives access to all kind of content. Then on top of that I pay over $1000 a year just for a couple hundred channels of pre-programmed content. If I payed higher for my broadband and then payed subscription fees for access to premium content from various providers directly, there’s a lot of room there before it reaches the high bill I pay to the content middle-man. No one loses either, the cable/sat companies shift their focus to higher quality broadband products and the content providers sell directly to viewers and become broadband clients as well. We just finally get the choices we’ve wanted for years.

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  19. [...]  |  GigaOM  | Email this | Comments Posted in All [...]

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  20. Yes, of course economy, housing market, competition between IPTV/Satellite/Cable are all factors to consider when analyzing these figures, but I think it is safe to say there is a growing number of cord cutters.

    I think it is important to think about how the powerful cable/satellite/telco companies will react to this very threatening Cord Cutting trend to protect their own business interests.
    -Switch to metered broadband usage?
    -Content creators to sue hosting/users who watch/download copyrighted material like the music companies did? an attempt to kill DMCA laws?
    -Net neutrality issue-will they control quality of connection based on their own interests
    Who knows what they will try but I guarantee they are fighting hard to protect their best interests. We all know how money + lobbyists influence legislation.

    It is important that us Cord Cutters unite so that we can react quickly and fight any unfair legislation or business practices. Our only power as citizens is when we are well informed and unite in large numbers. I invite you to join the Cord Cutters United facebook group to share information and form a group of like minded citizens/consumers who want to protect their rights. You can link to the Facebook group from CordCuttersUnited.com

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  21. [...] stakes are clear: Cable is the dominant player, but they are already losing territory, with estimates of half a million subscribers lost in Q3. Some analysts are predicting Cable will slip 43% by 2015. You probably know someone who has cut [...]

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  22. Guys, you can’t let the conclusion you want to draw color your data. I’ll assume you’re working off the same set of numbers from SNL Kagan. If so you know that the entire Pay TV industry (cable/satellite/telco) lost 216,000 subscribers in Q2 (most of the 711,000 cable losses went to satellite/telco), and actually GAINED 66,700 subscribers in Q3. Yes I know you’d just like to quote the cable numbers to make your point (cable lost again in Q3 just like you said, but satellite/telco more than made up for it). Now even that gain isn’t keeping up with the increasing population, but with the downturn in the economy, the housing failures, etc I don’t see any basis for your conclusions that these are all due to cord cutting because of internet TV. Not saying it isn’t happening, just saying your analysis is insufficient for your conclusions. Sorry.

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  23. Traditional TV is for the birds. Why pay for what everyone can get for free with fewer commercials? Take a picture, because soon traditional cable/satellite providers will be out of the game altogether.

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  24. The cable/sat companies must adapt or become extinct, raising prices every year while providing the same amount of channels turns many subscribers off.

    I cut the cable cord over one year ago and I don’t miss it, I have OTA+Netflix+Hulu and that’s enough for me.

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  25. My cable tv service has raised rates too high for me. I’m thinking of canceling my cable tv and considering Netflix streaming vids as an alternative. I’ll really miss HGTV and discovery channel though.

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  26. Cut the cable/satellite and spend the $70-100 to join a nice gym. Then you can watch TV while getting skinny instead of watching TV and getting fat.

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  27. [...] is cutting the cord? A fair few consumers, it would seem. NewTeeVee recently reported that subscriber losses for four of the top five cable providers totaled more than 500,000 in the [...]

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  28. Hello im new here but work with the cable company for years, I like where media is headed with iptv and internet without the cable box or setop box but keep in mind that the cable company’s own the fiber and the feeders and amps so another word they have the internet on a lock down so will see how far people could be without the cable company you need the internet to watch your content online.

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  29. [...] Source [...]

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  30. [...] other words, my quixotic adventure is slowly becoming mainstream. According to NewTeeVee estimates, about 500,000 folks cut their basic cable subscription in the third quarter of 2010 alone.  Are [...]

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  31. Harumph. We’ve been cord-free for three years, ever since the evil cable company (formerly owned by a famous perp-walker) moved our favorite channel to digital, in essence, wanting to charge us $62 a month for one channel. That was enough.

    Since then, our Travel (Channel) Budget has amassed over $2K. We don’t miss it, though I would still like to have my Fox News.

    We’re stilling waiting for someone like Netflix, Amazon, Apple, Google or Microsloth to sell us cable channels, via an IP STB, by the hour, day, week, or month. We’ll pay handsomely ($3-5 / channel month, minimum billing of $30-50), but only if we have our very specific choice of channels. We’d also pay prime-ticket prices ($20) for first-day-of-release first-run movie rentals if they aren’t compressed to death.

    Until then, ain’t nothin gonna happen. Our TV died this year – we won’t be renting any DVDs, buying a big screen or Blue Ray player, until industry comes around to offer content in a 21st century context.

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  32. If the choice is paying for cable and, I dunno, paying for groceries so your kid won’t scream at you that he’s hungry for the millionth time, then I suppose this article makes sense.

    Welcome to the Great Recession.

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  33. Why pay for something that isn’t worth anything? Cable programming sucks, it’s as bad (and sometimes worse) than freely available broadcast programming. I suppose unwatchable programming is the unavoidable consequence of spreading 4 or five networks worth of capitol over 500 cable stations.

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  34. One word: “Netflix”. I cut cable which was costing me a fortune and switched to Netflix. I can download pretty much anything I want to see, and now that ESPN also has a channel on the XBox I can even get sporting events. I went from over $100 per month to $10 per month. $90 a month pays for my happy hour beers every Friday. Also, with Hulu I don’t miss new shows.

    Comcast gave me so many issues I was going to toss them anyways. It was costing my a ton of time, effort, and money just to keep Comcast from spiking my bill for no reason. Good-bye Comcast, and may Wall Street rip your company apart.

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  35. Unfortunately, cable is included in my quarterly condo fees. If it weren’t, I would have canceled a few years ago. It’s really and truly not worth the cost.

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  36. Good, i hate comcast; they deserve it. They offer crappy customer service with crappy prices. I also find in interesting how internet prices have been relativly stable more or less, but haven’t gone down in price.

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  37. OTA for local (never really used though) and offers me 24 channels in High Point NC + Hulu + Netflix = $8/month and TONNES of stuff to watch for the whole family…plus a mac mini for photos etc to boot ;)

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  38. [...] that four of the top five cable companies announced during earnings that they had collectively lost more than 500,000 subscribers, in part because we didn’t take into account gains made by satellite and IPTV providers. Add [...]

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  39. [...] thing that is clear: Time Warner Cable needs to do something to stop customers from fleeing cable to sign up with IPTV or satellite providers, or who choose to [...]

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  40. [...] it announced plans to roll out a new, lower-priced cable package it hopes will slow the number of customers dropping their cable packages or moving to other providers. But the new TV Essentials package, which it will test in parts of New [...]

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  41. [...] Instead, the real work in the test is being done on improving search and discovery of the programming it delivers. But while an improved navigation system would be a welcome change from the “grid” programming guide that has plagued cable subscribers for decades, it does little to alleviate the pressure Comcast and other providers are feeling from broadband video services. [...]

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  42. [...] Instead, the real work in the test is being done on improving search and discovery of the programming it delivers. While an improved navigation system would be a welcome change from the “grid” programming guide that has plagued cable subscribers for decades, it does little to alleviate the pressure Comcast and other providers are feeling from broadband video services. [...]

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  43. [...] quarter, for instance, private cable companies lost about 200,000 subscribers. While the top four cable providers reported about 518,000 subscriber losses in the third quarter, SNL Kagan reported that all cable providers — including those that [...]

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  44. [...] quarter, for instance, private cable companies lost about 200,000 subscribers. While the top four cable providers reported about 518,000 subscriber losses in the third quarter, SNL Kagan reported that all cable providers — including those that [...]

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