The TV networks are hurting because their most profitable customers – viewers of pornography – just aren’t watching enough. Sam Schechner and Jessica E. Vascellaro report for the Wall Street Journal:
Cable and satellite television companies have a pornography problem: Their customers aren’t watching enough of it.
Companies’ revenue from highly profitable adult video-on-demand and pay-per-view services has been slipping, as the genre’s consumers spend more time browsing porn on the Web.
The trend is prompting TV executives to pull back the curtain on how porn contributes to their businesses, a topic they have been loath to discuss publicly.
On Thursday, satellite provider DirecTV cited “lower adult buys” as a cause for weaker pay-per-view revenue in its second quarter earnings. That followed Time Warner Cable Inc.’s admission last week that shrinkage in the adult category was responsible for more than a third of a $14 million drop in video-on-demand revenue. While only a sliver of the cable company’s $4.9 billion in revenue for the quarter, porn is one of TV providers’ most profitable segments.
Other cable- and satellite-TV executives say they have been weathering the problem for years. “There’s been a fairly steady trend over some time period now for adult to go down largely because there’s that kind of material available on the Internet for free,” Glenn Britt, Time Warner Cable’s CEO, said on a conference call to discuss earnings results last week.
Adult TV’s woes echo broader challenges that the television business is facing from Internet video. Distributors and TV networks, for instance, are talking about restricting next-day Web streaming of TV shows, which some executives believe eats into ratings and makes it easier for television viewers to become “cord-cutters.”
“This should be a cautionary tale for the larger content community,” one cable-TV executive said of the porn declines. “This content is devalued to our customers because of the alternative models.”…
[continues in the Wall Street Journal]
