Despite some struggles, cable operators continue to prosper
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Despite rising programming costs and subscriber losses, cable operators continue to have the highest profit margins among media companies, according to a new study from from Ernst & Young’s Global Media & Entertainment Center.
That cable operators have an average profit margin of almost 40% won’t be welcome news to subscribers tired of seeing their bills go up while their providers pass the blame on to their content providers.
To be sure, the price tag for programming is growing. With broadcasters now demanding cash to be carried, cable operators are shelling out more money for the same content. Sports programming costs also keep skyrocketing. In Los Angeles, Time Warner Cable recently struck a deal with the Lakers to create a new channel. Regional sports channels in big cities usually cost more than $2 dollars per subscriber per month.
The still-strong profit margins come at a time when cable operators have struggled to hold on to their subscribers. In 2010, the pay-TV market, which includes satellite as well as cable, grew only 0.2%. Despite that, cable operators continue to insist that people are not cutting the cord in favor of getting content online.
-- Joe Flint
