NEW YORK (TheStreet) -- The cord isn't all the way severed, but it's definitely being cut.

As younger generations opt for on-demand, a la carte and mobile-only media, pay-TV companies are being forced to adapt to the propensity of some viewers to cut their cord or never get one in the first place.

Yet even as the decline in pay-TV subscribers accelerates, the cable and satellite-TV business remains healthy. That's because subscribers who cancel their pay-TV subscription mostly continue to pay the same cable-TV company for Internet access and new standalone TV services such as Dish's Sling TV, Time Warner's HBO Now and Sony's  (SNE - Get Report) PlayStation Vue.

Yes, cords are being cut, but broadband operators aren't suffering.

"The second quarter earnings season will be put up or shut up time for the cord-cutting thesis," Craig Moffett, senior analyst at MoffettNathanson, said in a recent report. As Comcast (CMCSA - Get Report), Cablevision (CVC), Time Warner Cable (TWC) and Charter (CHTR - Get Report) all are beating the S&P 500 this year, Moffett said that "suddenly, the cable stocks are back in vogue."

Comcast, which reports its second-quarter earnings on July 23, has gained 11% in 2015 while Charter Communications, which reports on Aug. 4, has climbed 9.9% this year. The benchmark S&P 500 has increased 3%. Over the next six years, profits from cable bundles are estimated to drop by $7 billion to a total $12 billion in 2020, while high-speed data plans are seen increasing by $14 billion to total $35 billion in 2020, according to a July 14 Deutsche Bank report.  

Cord cutting is a relatively new term, but it's grown in importance as the number of subscribers to the traditional 150-plus channel TV-bundle declines. 

Curiously, the subscriber decline is taking place even as new household formation is accelerating, according to the U.S. Census Bureau. More than 1.4 million households were created in each of the last two quarters, a three-fold increase over the two previous quarters. Yet that hasn't reversed the trend toward fewer pay-TV subscribers.

In the first three months of 2015, the rate of new subscribers fell by three tenths of a percent, three times larger than normal over the past eight years, according to data compiled by MoffettNathanson.

"Pay TV subscribers took a nosedive, contracting for the first time ever in what has historically been a seasonally strong quarter," Craig Moffett said about the poor first quarter performance from many cable providers. "Until now, there hasn't been an easy (and legal) way to get ESPN or current HBO shows like Game of Thrones without a cable subscription."

Even as profits from Internet plans rise, cable-TV companies are stepping up their online TV offerings. Comcast is just the latest to do so, introducing a package that includes the major broadcasters --Disney's (ABC), Comcast's NBC, CBS and Fox  (FOX) -- and HBO for $15 a month. Dish's Sling TV, which began in March, has accumulated around 250,000 subscribers, each paying $20 a month, according to Re/code.

Opinions on the potential success of these offerings are mixed, yet industry observers say diversification might be enough to offset subscription declines.  

"[Cord cutting] is happening more and more, and that's just the reality," Ira Deutchman, cofounder of the digital exhibition company Emerging Pictures, said. "It's not a terrible thing for Comcast or any of the cable providers because they are still providing the Internet service."

Cable companies have been doing well generally. Comcast's stock leads the pack, outperforming the S&P 500 year to date return by 8 percentage points, and second quarter Thomson Reuters estimates call for 82 cent-a-share earnings, up from 81 cents a share in the first quarter.

Some critics say the financials aren't enough, that problems run deeper than the earnings reports are able to show. Customers of the cable companies have been notoriously frustrated, and a focus on making investors happy instead of customers may not be sustainable.

"They have done a wonderful job nickling and diming their way to wonderful predictable returns for the Street, and the Street has rewarded them for that," Steve Beck, managing partner of the management consultancy firm cg42, said. "But let's not mistake overall business health and customer satisfaction with financial performance on Wall Street."

High customer frustration could eventually uproot cable providers if not addressed. 53% of customers would leave their current cable providers if given another option, and 73% of customers felt like their cable provider took advantage of their relative monopoly, according to Beck. 

Companies are also diversifying beyond their fellow cable providers. Comcast acquired NBCUniversal in 2013 for $16.7 billion. This year especially, the move has proved to be a smart one for Comcast, as record-shattering movies like Jurassic World and Minions have been raking in profits to the tune of $1.45 billion in the first quarter, representing 8% of Comcast's total revenue.

As earning season descends upon Wall Street, the cable companies seem almost immune to the droves leaving their business and cutting the cord.