Cable Under Fire: Plunge in Ratings Could Spell Trouble for Top Nets

Virtually all of cable’s top entertainment outlets have suffered double-digit ratings declines so far this year — drops that are particularly pronounced in the C3 ratings (live broadcast, plus three days of playback on DVR after the original airing) that are the currency of advertising sales. But the headwinds that Big Cable faces are much stronger than what might be deemed as a cyclical drop in viewership.

In short, the most established players -- think USA Network, Syfy, TNT, TBS, A&E, Lifetime, MTV, Discovery, FX, AMC, ABC Family, among others -- are starting to grapple with the issues of audience erosion, rising programming costs and heightened competition for ad dollars that have bedeviled the Big Four broadcast nets for more than 20 years. Nobody’s suggesting that basic cable has suddenly become a bad business. But Wall Street’s bearishness on domestic growth prospects for cable has amounted to a sharp 90-degree turn after years of fawning over the sector. Showbiz’s largest conglomerates -- Disney, Time Warner, Comcast, Fox and Viacom -- are deeply dependent on the reliable cash flow from cable channels at home and abroad to pump up earnings. Cable execs are accustomed to leading divisions that are the heroes of quarterly-earnings reports.