What is cord-cutting, the practice that threatens Warner Bros and Paramount ?

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Le cord-cutting , you may not be familiar with this term, but you have heard of this phenomenon which is recurrent in the United States. It's simply that many Americans are unsubscribing from cable when that medium once reigned supreme in the entertainment industry.

A Flood of Bad News

This trend is reflected in numbers and they are very painful for those involved. In the middle of summer, we learned that Paramount was reducing the value of its cable channels by $6 billion, which include well-known names: Comedy Central, Nickelodeon, and MTV. At almost the same time, Warner Bros Discovery depreciated its channels by $9 billion, including HGTV and CNN.

In fact, and as our colleagues at the Financial Times point out, it is an entire sector that is impacted. Indeed, with their juicy advertising revenues and subscriptions, these networks had significant means to finance audiovisual creation and it is in this context that the golden age of series occurred (we are thinking in particular of HBO, but there are others).

But let's face it, these television networks are now only a shadow of what they once were. So much so that some analysts call them burdens for these large companies. According to estimates cited by the specialized media, there will only be 50 million cable subscribers in 2028 compared to 73 million in 2023 for Uncle Sam.

Streaming, a way out ?

In this ocean of bad news, there are still some reasons for hope. Disney, for example, announced an increase in profits for its sports network ESPN. Similarly, while streaming platforms were generally relatively unprofitable, these services are now reporting profits.

But according to experts, this will not be enough to stop the losses generated by cable networks. Therefore, Warner Bros and Paramount are trying to offer bundles to encourage their customers to stay. But it is not certain that this will be enough. The reinforcement of their Max and Paramount+ platforms now available all over the world is also an interesting avenue.

Les Échos nevertheless report a slimming cure at these two giants. A rather elegant term that actually refers to successive waves of large-scale layoffs within these two groups.

If you are interested in this increasingly clear resemblance between cable and streaming platforms, we invite you to reread our previous analysis here.

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