Cable's Growth Worries Take a New Twist

In the cable TV business, holding onto basic video subscribers has become like running on a treadmill gone out of control. You have to work harder and harder just to stay in the same place.

That's what some people in the investment community are concluding after looking at basic subscriber figures over the past two years.

As investors have already noted, the growth in households subscribing to basic cable has slowed and even reversed in recent years. But behind that well-known problem is a lesser-known one that's equally troublesome or even more so for cable's future, says one short-seller.

That second problem is the decline in basic cable penetration -- the percentage of households in areas served by a cable operator that subscribe to the multichannel TV service. Because a shrinking percentage of households in a given area are subscribing to cable, operators must keep expanding their system into new neighborhoods in order to maintain subscriber growth or stave off losses, says the short-seller, speaking on condition of anonymity. ...