Big cable is facing an ‘affordability crisis’

We've long argued that price increases for pay TV packages were making the traditional cable or satellite subscription too expensive for a growing number of Americans. Bernstein Research Senior Analyst Craig Moffett issued a research note that not only backs up that claim with some real data, but paints a damning picture of cable affordability in light of larger macroeconomic trends.

In short, many U.S. households have less money for discretionary spending than they've had in decades, at the same time that the price of TV entertainment has risen dramatically. Taking data on income and expenditure trends for each of five income brackets into account, Moffett reports that the bottom two-fifths are being increasingly pressured due to the lack of real wage growth and the increase in the cost of necessities. The inability to pay for necessities — much less home entertainment — threatens to upend an industry that has already more or less reached its saturation point. According to Moffett, approximately 86 percent of U.S. households currently pay for TV services. “Relatively few other sectors have this kind of economic exposure to the bottom half,” he wrote.