Has the "cord-cutter" threat to pay TV been exaggerated?

If media reports are to be believed, millions of Americans are eager to unshackle themselves from the tyranny of the cable and satellite industry. The problem with that notion is that the data doesn't support it.

While it's true that the ranks of cord-cutters (the high-tech buzzword describing people who sever ties to pay TV), are on the rise, their numbers are still small, accounting for about 2 percent of the overall population, according to veteran cable industry analyst Craig Moffett.

The rise of services such as Netflix (NFLX) is hurting the industry. Data from Leichtman Research Group found that the top nine pay TV companies lost 150,000 net video subscribers in the third quarter, an increase over the 25,000 that quit a year earlier. This was the biggest third quarter decline ever, according to Leichtman. Many people, though, are staying put. Comcast (CMCSA), the largest cable company, ended the quarter with 22.4 million customers, while top satellite operator DirecTV (DTV) had 20.2 million.

"The reality is that the pace of cord-cutting remains a drip, drip, drip," said Moffett, a senior research analyst at MoffettNathanson, a research firm, in an interview. "It's not the torrent that has been projected."

To be sure, people aren't enamored with the pay TV industry, which has ranked at or near the bottom of the American Customer Service Index for years. Comcast, in particular, has gotten pilloried for customer service mishaps. Critics of the company have raised this issue with regulators as they review its planned acquisition of Time Warner Cable (TWC).

Millennials not only are dropping their cable service at higher numbers but many aren't even signing up in the first place, becoming what the industry calls "cord nevers." According to data from nScreenMedia, 19 percent of millennials don't have pay TV and a whopping 98 percent of those say they have no intention of getting it. That explains why pay TV subscriptions fell for the first time in 2013.

"Raised in the interactive media landscape of the web, the passive environment of television is just not that interesting to them," according to NScreenMedia.

But that doesn't tell the whole story. As Leichtman notes, millennials have always been less likely to subscribe but that there are plenty of people who are willing to pay for cable and satellite service. For one, people can't get an "apples-to-apples" experience by solely streaming video online that's comparable to what they can get with pay TV. That's especially the case with sports, one of the few genres of programming that people continue to watch live.

Moreover, though pay TV critics have called for services to be unbundled so that consumers would only pay for the channels that they watch, many economists argue that people would pay about the same rate for the service as they do now and get far less choice.

"I don't believe in the next 5 years or in the next 10 years you will get an 'apples-to-apples' comparison," said Leichtman, in an interview, adding that given the high cost of sports programming it seems unlikely that media companies would allow people to watch their favorite teams online for free. "If your favorite team is where you live you are sunk."

Major League Baseball, among others, allows people to stream out-of-market games on tablets and other devices. As for a-la carte models, Leichtman figures a popular cable channel like Fox News would wind up costing $10-$15 a month, an "egregious" price that consumers wouldn't pay. Also, just because someone quits pay TV doesn't mean that consumers won't come back.

"People are constantly and always have been going in and out of the market," he said.