Market Overview

'The Hole Saga' Is Over, but Comcast and Time Warner Aren't Backing Down Yet

By Carol Kopp, Minyanville Staff Writer

The satirical series entitled "The Hole Saga" has ended its brief but inglorious run on the Internet, going "on hiatus" as they say in the television biz, meaning it's probably never coming back.

"The Hole Saga," or holesaga.com, was an ill-fated attempt by the cable television industry to use humor and high production values to illustrate the importance of subscription cable service in our lives.

It was sensational, but not in a good way. The media reaction was quick and brutal.

"The Hole Saga" showed the potential horrors of cable cord-cutting in four vignettes, most notably one starring a man who suffers an attack by a crazy-eyed mutant rabbit because he missed the news on TV. Horribly, the vignettes were "interactive," demanding that the viewer make the life-or-death decision to cut the cable, or keep it.

The tagline: "Life without cable leaves a mighty big hole."

The feature appears to have been taken down after running for only about 10 days. A spokesman for the National Cable and Telecommunications Association, its sponsor, told Washington Post that the site would be shut down this week.

The feature was widely seen as an act of desperation by a cable industry that lives in fear of consumer "cable cutting," that is, canceling pay television and relying on Internet-based options for home entertainment.

It seems more likely that it was a heavy-handed attempt at public relations. With all the attention that cable cord-cutting is getting, the big cable companies seem to be just concerned enough to make a few token gestures.

One was "The Hole Saga," which actually was supposed to convey the crucial benefits of cable as a source of both television and Internet services. (Many of its critics wondered how that doomed cyclist could have missed the mutant rabbit news on Twitter (NYSE: TWTR) or CNN.com.)

In slightly more substantive gestures, big cable providers Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC) recently rolled out competing special deals for subscribers who are fed up with paying for huge packages of channels they don't want.

In October, Comcast began offering a package of basic cable plus HBO and Internet access for "as low as $39.99."

In response, Time Warner Cable recently added a promotion for a $19.99 per month “Starter TV” package that includes little beyond the broadcast networks and some shopping channels, or a $29.99 per month version that includes HBO.

Both packages have the usual cable company caveats: Taxes, fees, and equipment rentals raise the prices considerably, and the deal is good for only one year, after which subscribers will pay the regular price, whatever that may be.

Both companies' offers also have a glaring strategic omission: cable sports programming. You want your ESPN, you have to buy the big package.

That lack of live sports programming is just one big reason why the cable cord-cutting movement, despite its obvious allure, is unlikely to reach mass numbers in the near future.

There are other reasons: Streaming video choices are vast and deep on the Internet, but they do not include “live” programming, from sports to news and special events. Nor is most first-run television programming available online until the day after or the season after, unless — you guessed it — you've got a cable subscription.

It's not even the cable companies that are in charge here. The networks own that programming, and they're protecting their revenue streams from cable.

Worse, most people who have cable subscriptions get their Internet service from the same source. Researching the quality and price of the alternatives is more time-consuming than most busy consumers like to contemplate.

The pay television industry is indeed losing subscribers, down more than 500,000 over the past six months alone. But that's from a subscriber base of about 100 million.

So, when does the least-respected industry in America start to worry about its future? Presumably when that fabled tech-savvy, Internet-based younger generation comes of age.

In the 18 to 24 age group, “traditional television” viewing has declined for at least seven consecutive quarters. But they're still spending close to 22 hours a week in front of the tube, and the declines over time are shrinking, to just two minutes per week in the most recent quarter.

So, the real message of the pitiful public relations efforts may be this: The cable companies are not in full-on panic mode yet, because they don't have to be.

No positions in stocks mentioned.

Read more from Minyanville:

Google Crushes Dream of Android 4.4 KitKat

New Rumor Says Apple Will Debut Large Format iPad Next Spring

What Apple's 2013 Shopping Spree Tells Us

The following article is from one of our external contributors. It does not represent the opinion of Benzinga.

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