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TW Cable loses 130,000 home-cable subscribers

The temptation is to call the people who dropped TWC cord cutters, but are they really unhappy with cable or have they just lost the ability to pay?

Time Warner Cable said today the number of its residential cable TV subscribers shrank sequentially.

Greg Sandoval/CNET

Time Warner's cable TV subscribers number 12 million after losing 130,000 customers, or 1 percent, during the second quarter, according to the company's earnings report.

In tech, we often assume that those people who have discovered that accessing TV shows and films over the Internet is cheaper and are dropping their cable subscriptions, also known as "cord cutting."

Whether cord cutting occurs because people are opting for Web-based TV is much debated. There's no question that some of the big cable companies and premium cable channels have lost subscribers, but some have maintained that the sagging economy is really to blame and doesn't represent a mass defection to the Web.

Dan Rayburn, a respected analyst who has covered streaming media for a decade, said in an interview last night he believes that there is a correlation between home foreclosures and the rise of cord cutting.

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"If you look at the number of foreclosed home in the United States, it's interesting to compare those numbers against the number of cable subscribers at the times they've dwindled," Rayburn said. "At times when cable companies have lost the most subscribers, those were also the times that we've seen the most homes foreclosed on. These are unfortunate people who have lost their homes but they are automatically classified as cord cutters. They are cutting the cord because they've lost everything else."

One other note from Time Warner's earnings report was that the cost of content went up by 4.1 percent to $1.1 billion. The company said the rise was due to "contractual rate increases and increased retransmission consent expense."

Time Warner and other cable operators pay TV networks and film studios top dollar for their content. That's one of the reasons why we're seeing big media companies begin to limit the availability of shows and films available online for free or on the cheap. The Web is undercutting cable.

Correction at 9:10 a.m. PT: In a earlier version of this story, the percentage of total Time Warner cable TV customers who dropped the service was incorrect. The correct figure is 1 percent.