The past two years have put paid to a number of myths. Aside from proving that "decoupling" -- the curious notion that the rest of the world could somehow keep chugging along despite the unraveling of the U.S. economy, representing a quarter of global gross domestic product -- was a fraud dreamed up by highly-paid Wall Street "strategists" who couldn't forecast their way out of a paper bag, events have also debunked the popular belief that some sectors are recession-proof.
Among the sectors most often cited as being immune to the fallout from a faltering economy is the entertainment industry. According to those who allegedly know best, when people don't have money to spend, they will still manage to keep themselves occupied with various forms of escapism, including cable television. Unfortunately, what these experts failed to take into account is the fact that no small number of individuals may decide that paying nothing at all for a little less choice is a bargain worth taking.
In "Some Viewers Untying Themselves from Cable," the Associated Press details the nascent trend.
Cost increases as free Internet options increase, and industry is noticing
Porter McConnell gave up on pay TV last summer after noticing that monthly rates kept creeping up.
Now with no satellite or cable TV, she watches her trusty old TV set with an antenna or she goes online to catch her favorite programs. Once in a while, she buys shows from Apple Inc.'s (AAPL) iTunes service. McConnell also upped her subscription to Netflix Inc.'s (NFLX) movies-by-mail service so she gets two DVDs at a time instead of one, for $15 a month.
"Part of it is, I've got to economize," said the 30-year-old Washington, D.C., resident who works at a nonprofit.
McConnell is the kind of consumer who makes cable and satellite TV operators lose sleep. While a weak economy invariably makes people pinch pennies, this is the first time that viewing shows online has become a viable competitor to pay TV, making cutting the cord easier.
Cable operators are starting to notice. Glenn Britt, chief executive of Time Warner Cable Inc. (TWC), voiced his concern Wednesday in a quarterly earnings discussion with analysts.
"We are starting to see the beginning of cord cutting," he said. "People will choose not to buy subscription video if they can get the same stuff for free."
