Penny-pinching consumers are turning to cheaper options. Television broadcasters and networks are demanding more money out of the cable companies, and couch potatoes are tired of paying for dozens if not hundreds of channels that they will never watch.
Then we get to performance. When customers are paying nearly $100 for digital cable packages -- and far more than that when bundled with Internet connections and broadband telephone services -- they demand flawless uptime.
It's not a realistic expectation, and it's why you will often see cable companies and wireless carriers among the most hated companies in the country.
I'm not kidding. Comcast (CMCSK) was actually last year's winner in Consumerist.com's annual Worst Company in America contest. It's being accused of dodging the distinction this time around by asking employees to vote multiple times for its competition.
Setting Aside Personal Biases
Despite the persistent AT&T (T) U-verse marketers that knock on my door every other month, I've stuck it out with Comcast. I know its shortcomings. My Internet connection is buggy, and it doesn't seem to get any better despite regular technician visits.
However, there are apparently people that are far more frustrated with Comcast. The country's largest cable provider lost 165,000 net cable subscribers in its latest quarter. This isn't some one-time quarterly fluke. Comcast has seen 443,000 more homes cancel than sign up so far this year, and that's after losing 757,000 accounts in 2010 after shedding 623,000 customers in 2009.
The entire premium television industry isn't in a funk. For every Comcast and Dish Network (DISH) that lost subscribers during July, August, and September, there's a DirecTV (DTV) or AT&T U-verse that gained new homes.
The overall trend is still pretty troublesome. Given the growing popularity of streaming services, online entertainment diversions, and networks that stream shows through their own websites, Comcast may never see its subscriber numbers turn up.
The Peacock's Feathers
Comcast's decision to buy NBCUniversal seems to be an admission that content -- and not simply being a gateway to content -- is king. Unfortunately for Comcast, the NBCUniversal deal is also a conflict of interest.
Having interests in movie studios, television shows, and actual channels makes other networks rightfully weary of the deals they sign with Comcast. We also already know that Comcast can be an easy target.
Comcast's studio put out Tower Heist last week. The cable provider was hoping to use the movie to test out the concept of $60 home rentals of movies while they are still playing at the corner multiplex. Yes, 60 bucks! Exhibitors obviously didn't like the move, threatening to boycott the movie in their theaters if Comcast went through with its stunt. Comcast blinked.
A Slow-Footed Conglomerate
If NBCUniversal would have been Comcast's ticket to scintillating growth, it would have been worth its hefty price tag. Sadly, it isn't. On a consolidated basis, pro forma revenue and operating cash flow in its latest quarter rose by a mere 5% and 3%, respectively.
If you've seen the future of television, you know that it's not Comcastic.
The days of $100 cable bills, for the most part, are being ripped to shreds. Web-savvy couch potatoes are realizing that an HD antenna and a streaming service like Hulu Plus or Netflix (NFLX) will fit the limited time that we have in front of the boob tube.
Even if we stick to actual pay television services, folks are no longer limited to their local cable provider. Those territorial monopolies are history. Cable television has always had a say, but now you have U-verse and Verizon's (VZ) FiOS marketing their services aggressively and plucking customers from Comcast and smaller overpriced providers.
If you want a new wrinkle, consider that Google (GOOG) -- yes, Google -- is reportedly readying an Internet-served pay television service that will roll out in Kansas City next year.
Financially speaking, Comcast has been able to offset what is now three years of net losses of video customers by pushing its broadband telephone and cable modem services. The NBCUniversal deal will also help disguise the fundamental problem here: Couch potatoes are walking.
Comcast, you have a problem -- and I don't think your employees can vote your way out.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Netflix. The Motley Fool owns shares of Google. Motley Fool newsletter services have recommended buying shares of Netflix and Google.