Saving Money On Cable – Inside the Experience of A Cord-Cutter

It was early August, 2015 and Disney (DIS) had just created a ruckus by addressing “cord-cutting” and admitting softer than expected results at ESPN. Cord-cutting is the practice of cancelling subscription or pay-tv services like cable TV in favor of cheaper alternatives (including not watching TV at all). There is also growing interest in “never cords” – people who never bother to subscribe to such TV services. ESPN is the major sports network that Disney acquired in a $19B deal with Capital Cities/ABC back in 1996.

Eager to understand this dramatic turn of events for Disney, I sat down to talk to a friend who is a big fan of Disney (the company) and dedicated shareholder. I got a lot more than I expected. I received advice that will save me about $90 per month: get rid of my cable subscription. This ironic advice from a DIS shareholder was surprising, but it made a lot of sense. This post is my story of how I quickly joined the small but growing group of cord-cutters.

The HD (high-definition) antenna is a central core part of the solution. This antenna receives the digital signals from local broadcast television stations. I am VERY embarrassed to admit that after all these years I never understood that the signals from traditional broadcast stations are still available over the air…for free. I thought the elimination of the old analog signals meant that everyone had to get cable to access local television broadcasts. Not so.

The U.S. made the final transition from analog to digital signals in 2009 in line with a mandate from the Federal Communications Commission (FCC). My friend delivered a revelation: all these years I misunderstood the mandate as eliminating analog broadcasts in favor of digital transmission through a cable. Based on conversations I have had with others, I strongly suspect I am far from alone in this mistaken notion.

I next did my research and experimented with the HD antenna options. I decided to go to Best Buy (BBY) to make my purchase to facilitate rapid iterations. I did not want to wait through shipping cycles to receive and return antennas through an online site like Amazon.com (AMZN). Best of all, I did not have to spend hours poring over customer reviews while trying to sort through conflicting opinions. A helpful Best Buy customer service agent introduced me to the available options, gave me a high-level review of the performance of the antennas, and revealed his direct experience with customer returns.

I concluded I would be better off going straight for the high-end. I chose a Terk amplified omni-directional digital flat antenna. At the time of writing, the OMNITV1A model that I purchased cost $80 at Best Buy. (See addendum at the end of this article).

I ended up sticking with this antenna and did not even bother trying out any others. I like this antenna because of its flexibility. You can place it anywhere. It does not need to sit in or near a window. It has a stand for placing it vertically. After plugging the antenna into the television and scanning for channels, I was absolutely stunned to discover 75 channels (many of them non-English) all broadcasting in high-fidelity, high-resolution, digital brilliance!

I had to get used to the numbering for the digital stations. Some websites exist to help explain the local options and explain some digital TV concepts. For example, I found a helpful site maintained by Larry Kenney and Bill Choisser for the San Francisco Bay Area. Terk provides a page for locating local broadcast towers along with channel listings based on a zip code.

Note that experiences may differ based on location relative to the broadcast towers and the strength of those towers. For example, I had to experiment a bit with the placement of the antenna, and I have noticed that signal quality CAN very from time-to-time. My biggest challenge comes from the local broadcast for ABC. I have yet to figure out how to get ABC on any television or any place in the house. Fortunately, there is a ready solution for ABC programming: Hulu.

Before even realizing that I may have to get used to life without ABC TV, I decided to get Hulu as another component of the cord-cutting solution. Hulu provides a BROAD range of television shows from all the major traditional broadcasters, including ABC. Hulu has even started to bulk up on movies. I was amazed to see old favorites as well as complete seasons for the latest television shows. At the time of writing, for $7.99/month, Hulu subscribers get complete access with limited commercials. Eliminate almost all commercials for $11.99/month. There are no setup fees, extras, and you can change plans at any time. I was happy to pay the extra $4/month given the amount of money I am saving from dropping my cable subscription.

Since Hulu is a video streaming service, it requires high-speed internet service. I do not consider the cost of my internet service as a part of the cost of cord-cutting because I had internet service before this adventure began. The internet is a necessity for me and high-speed internet is a definite must-have. I would have internet service whether on cable or not. I have used high-speed internet for other free streaming services like Google’s YouTube, Vevo, and Yahoo Screen. The world of free video streaming content is vast and delivers tremendous value complete separate from cable. If you are starting from scratch, you should consider all the other things you can do with the internet when assessing the cost. In the end, you should evaluate your own media needs. It may turn out you are good with no internet and a simple HD antenna connected to your TV.

I also do not include the costs of Netflix (NFLX) or Amazon Prime in the cost of cord-cutting. I had access to both subscriptions before this adventure. Netflix has become a utility for kid’s programming. Amazon Prime added a streaming service as a bonus to subscribers. My family mainly uses it for shopping. Again, if you are starting from scratch, you should review the offerings across Hulu, Netflix, Amazon Prime, and other providers before deciding which service or services make sense for your needs. No matter how you mix and match, you will still end up saving big on your cable bill.

I WILL miss some programming. For example, I am a huge sports fan, especially of American football. Monday Night Football games are only broadcast on Disney’s ESPN. ESPN is also the exclusive broadcaster of many tournaments and smaller sports. Some college sports games are only available on certain cable channels. NFL Network is only available on cable although the network makes some content available on the internet or through its app. I had to make a conscious decision to accept that life can go on without these shows. Alternative viewing options include hanging out with friends more often (like at sports bars) and subscribing to special sports streaming packages (expensive and not likely for me). I am even willing to catch games on the radio like I did as a kid. Thanks to the world of free apps, many radio stations are available for streaming through the likes of iHeartRadio and TuneIn Rado. The NFL does not allow radio streaming of non-local games but I have found that the local stations seem to offer streaming from their websites for desktop-only access. For example, try doing a search combining the city name, the team name, and the term “sports radio” to see your available options. (Click this link for an example using Yahoo search for “Denver Broncos sports radio”). If you like getting news from your local television stations, check out whether they provide apps for streaming their programming for free.

You should take careful note of what cable programming you will miss and assess your alternative viewing options before deciding to cut the cord. If you are starting from scratch, you will never know what you are missing and can avoid getting addicted in the first place (smile).

After lining up all my viewing options, I had one last experiment. I needed an option for recording TV shows. Cable TV services include DVR (digital video recorder) options that also cost a monthly leasing fee. A DVR enables multi-show recording and a tremendous capacity for storing those shows. After asking friends, I found a wealth of options. I quickly settled on TiVo (TIVO). With money in my pocket from my cable savings, I was willing to prepay and buy the DVR outright. I chose the Roamio OTA TiVo Series 5. TiVo had a huge sale on the Roamio that made paying the roughly $400 to own the box a no-brainer. I now know that this was a clearance sale to make room for a new, even more advanced product called the Bolt that includes automatic commercial-skipping capabilities.

The Roamio has a lot of features, and I am still learning how to use them. There is no point in providing a comprehensive review since TiVo has retired the product. I will say that the TiVo DVR is smarter and does a lot more than the typical cable DVR. The Roamio includes many streaming apps, so you can watch Hulu and the like straight from the box. This feature can eliminate much of the need for getting an internet-enabled TV. Some streaming devices like Roku and Amazon Fire provide the same capability. It is amazing what has become possible with the on-going convergence of digital devices and the internet-of-things.

The hardest part about giving up my cable service was losing all the many shows I have recorded, some of which I may never see again. With the TiVo box, I now have ownership no matter how I configure my home entertainment in the future. If you do not get attached to your recordings and/or you want to maintain flexibility, leasing the TiVo box may be the best option for you.

First, there was a movement to replace 20th century landlines with mobile phone service. Now, a cord-cutting movement is just getting started to replace the leash of cable with the freedom of streaming. The numbers vary according to the various sources quoted in Wikipedia, but it is clear that the cable companies and content distributors have some time to adjust if they so choose. Disney appears to be getting ahead of the cord-cutting game with an expanding partnership with Netflix and part-ownership of Hulu. Still, Disney is putting a good face on everything and suggesting that the threat is real but not pressing and not yet game-changing. Here are relevant quotes from CEO Bob Iger in the earnings call that caused such a stir (from Seeking Alpha transcripts):

On ESPN…

“Well I think you can look at this many different ways. One, you can look at it in terms of the overall television landscape and the linear MVPD expanded basic business versus the growth in so-called over-the-top businesses or you can look at specifically with regard to ESPN. I guess I will take the broader sort of market look first. First of all I think while there has been a lot said about what’s going on in the multichannel universe and as I said in my comments, it’s still the dominant form of television viewing and it is the dominant form clearly for sports viewing as well. And we mentioned 83% — statistic 83% of all U.S. households watched ESPN, U.S. multichannel households watched ESPN in the first quarter.”

On the urgency for adjusting to cord-cutting (there is none?!?)…

“So when we look at the universe we don’t really see dramatic declines over the next say five years or so and therefore we are not taking what I would call radical steps to move our products into over-the-top businesses to disrupt that business because we don’t think right now that is necessarily the greatest opportunity. We just don’t think it’s necessary.”

On being a “must-have” for streaming platforms…

“That said there are new platforms that are launching, some multichannel and some other types of platforms that on the multichannel front they all want our programming. They want ABC, they want Disney Channel, they want ESPN. There isn’t one that has talked about launching without coming to us, suggesting a desire to have us. We are going to obviously because we believe that’s in our best interest, we are going to take advantage of those opportunities and at the right price under the right circumstances, license our linear channels to those platforms…”

On the partnership with Netflix…

“In addition to that you have the growth of platforms like Netflix or SVOD, that’s interesting as well because, while one could argue that for all the right reasons that’s starting to incentivize or maybe incentivizing people including millennials to cord cut, it’s also providing us opportunities because the Netflix has become a really important partner to us in buying our off-network product, buying original programming for us.

So we look at Netflix actually right now as more friend than foe because they have become an aggressive customer of ours. I also think that products like Netflix are pretty attractive because they offer a very user-friendly, efficient and oftentimes much less expensive way for people to watch television.”

On the future opportunity…

“So it’s a long over that way around my saying that we actually believe that with Disney, ABC, ESPN, our products we are really well-positioned. We’ve been among the first if not the first to offer our products on new platforms even if it’s somewhat disruptive, we still believe in the expanded basic service for years to come but we are going to take advantage of opportunities. It’s just hard to say when something either feels too disruptive too fast or not but when we see it, we will tell you about it.”

Cut on! Let me know your thoughts, feedback, and tell me about your cord-cutting experience in the comment area below.

Addendum (10/4/15): I was finally able to get the local ABC signal on the HD antenna but then lost the NBC signal. Clearly, I still have some learning to do! I also earlier asked for some advice from Terk. Here is the response:

“Thank you for contacting us. After reviewing the FCC data for your area I do notice that ABC is being broadcast in Hi-V and not UHF. Unfortunately, VHF stations broadcast signals do not travel as far as UHF and are more susceptible to impulse noise (RF interference). There are many items that could cause RF interference (CFL light bulbs, WiFi, microwave, etc..) and typically they are worse in the morning or at night when there are more things “on”. I would try moving your antenna as high up and/or as close to a window as possible making sure you completely uncoil the antennas cable and rerun a channel scan. Keep in mind that you will have to perform a channel scan each and every time the antenna is physically moved or adjusted.

If that does not work, I would suggest trying an antenna with more gain or an outdoor antenna.
Hope this helps!

Have a great day!

TERK Antenna Engineering”

I will likely soon try out Terk’s highest performing indoor antenna: the model OMNITV3A. It was not available on Best Buy. Currently, it is on back order when buying directly through Terk for $119. Amazon sells it for $84.50. Best Buy does not (yet?) offer it, so I will have to go online to try it out!

Source: FreeStockCharts.com

(DMA = daily moving average)

Full disclosure: long DIS call options, long AMZN, long YHOO