Time Warner Cable (29%), Charter Communications (72%, with a lift from the 27% stake John Malone's Liberty Media took in the operator this March) and Cablevision (30%) also are significantly improved.
But why? In a world of widely available broadband and a big (and rapidly growing) pool of Internet video choices, traditional pay TV should be under serious attack. Yes, cable operators have suffered steady erosion of video customers over the past few years as some share has shifted to satellite and telco providers. But subscriber losses have been offset by upgrading customers to higher-priced services and options, such as HD DVRs and digital video.
The Internet should be slicing through the pay TV model like a hot knife through butter. But it isn't. And, perhaps counterintuitively, despite lost subscribers, Big Cable's video-subscription revenues have actually kept growing overall.
Comcast, TW Cable, Charter and Cablevision generated $38.1 billion in video revenue for 2012. That was up a modest 1.9% from the year earlier, but it was a gain nevertheless. Meanwhile, those four operators collectively lost a net of about 1 million video customers last year.
But aggressive upselling hasn't been the sole reason for higher revs with fewer subs. A key is that cable operators have been raising rates for roughly the same collection of TV channels their subscibers got the year before to account for higher programming costs that operators must pay to cable and broadcast nets after each round of contract and retransmission negotiations.
The increase in monthly pay TV bills has been outstripping the rate of inflation for years.
It's worth noting that Cablevision, which hasn't raised TV pricing since 2010, is the outlier in terms of video revenue growth among the four top public MSOs. Cablevision's video revenue dropped 2.8% in 2012; the op is desperate to keep core TV customers as it fights Verizon FiOS' aggressive incursion into its New York-area footprint.
Moreover, the decline of pay TV is not as life-threatening to cable operators as it would have been, say, a decade ago.
MSOs have managed to diversify their businesses, scoring robust broadband growth and solid gains in Internet and voice services, particularly among their business customers.
But trouble is certainly brewing in pay TV land. Signposts indicate that the gravy train is about to reverse course, if it hasn't already.
A leading indicator for the sector is DirecTV, whose fortunes are tied more directly to the subscription TV biz than are its cable or telco competitors.
For the first quarter, DirecTV added 21,000 net new U.S. subscribers, down from 81,000 new customers in the year-ago period. More worrisome, topper Mike White told analysts he expects the satcaster to lose customers in Q2. He blamed seasonality, chalking up prospective losses to the historically weak subscriber trends in the period. Indeed, the last time the satcaster saw a quarter with negative subscriber growth was Q2 of 2012, when it lost 52,000 subs.
As monthly pay TV rates head toward a mean of $100 and beyond, Internet rivals see an opportunity to break through on price point . Amazon, Hulu and Netflix have well-stocked libraries of thousands of TV shows and movies, available for one-tenth the rate of cable TV. Meanwhile, YouTube also is making a foray into subscription video. But those aren't really a replacement for regular TV, which provides a mix of live sports, news, broadcast primetime programming and more.
Around the bend lurks a far more direct challenge to pay TV incumbents: Intel is assembling Internet-delivered video packages, slated to launch in the fall. Dish CEO Charlie Ergen suggested earlier this month that he could make a play in that arena as well.