Joe Nocera, writing for the New York Times, has a column discussing the concept of a la carte pricing for cable channels. He says that an FCC study suggests that people’s cable prices would go up under a la carte pricing, even if they selected far fewer channels.
I don’t really follow the logic though.
The reason is that unmoored from the cable bundle, individual networks would have to charge vastly more money per subscriber. Under the current system, in which cable companies like Comcast pay the networks for carriage — and then pass on the cost to their customers — networks get to charge on the basis of everyone who subscribes to cable television, whether they watch the network or not. The system has the effect of generating more money than a network “deserves†based purely on viewership. Networks also get to charge more for advertising than they would if they were not part of the bundle.
Take, for instance, ESPN, which charges the highest amount of any cable network: $3 per subscriber per month. (I’m borrowing this example from a recent research note by Craig Moffett, the Sanford C. Bernstein cable analyst.) Suppose in an à la carte world, 25 percent of the nation’s cable subscribers take ESPN. If that were the case, the network would have to charge each subscriber not $3, but $12 a month to keep its revenue the same. (And don’t forget: with its $1.1 billion annual bill to the National Football League alone, ESPN is hardly in a position to tolerate declining revenues.)
What this suggests to me is that for every hard core ESPN viewer, there are 3 others who are getting charged $3 apiece under the bundled system to subsidize the hard core viewer’s reception of ESPN. (Thanks guys!) The ESPN viewer is apparently getting a $12 value for $3. But, the money is coming from somewhere. What value are these non-ESPN viewers getting for their $9? If the channels weren’t bundled, would that money otherwise go to the History channel? Are some channels getting less than they would otherwise because of the bundling?
Maybe I missed something obvious or maybe the writer failed to explain a crucial detail, but I’m not yet prepared to write off a la carte pricing as a good option for cable subscribers.
Again, this is why Big 10 network is evil. Ok, maybe not evil, but they want ME to pay for YOUR sports, just like ESPN.
Comcast tried to put Big 10 in their “Sports Pack”, so only the sports people would have to pay for it. B10 said all or nothing, and that’s why Comcast still doesn’t have it.
I think it is great, and I’m upset to find that I have been already paying so much for other people’s entertainment…
And, in the end, wouldn’t the costs be the same? I might not get ESPN @ $12/mo, but I’ll get SciFi at $4 a month, and Speed TV at $8 a month? I’d rather pay for just the channels I want, even IF the bill is the same…
Are some channels getting less than they would otherwise because of the bundling?
Yes, but I’m not positive which channels these would be. Probably ones with high viewership and alternative income streams. I’m sure QVC doesn’t rely on the cable fee to remain solvent.
Typically QVC Home Shopping and most religous channels pay to be on cable.
I’ve a feeling that cable channels will never be completely “unbundled.” The reason being that there will be certain assumptions about consumers and corresponding pressures put on consumers. “Well, if you want the Weather Channel, you probably will also want Animal Planet, Discovery (and its many variations), National Geographic, etc. You can get all of those for just $$$/month, vs. getting only some of them for $$$ a month.” I foresee mini-bundles (or many bundles). No matter how the cable company serves up the channels, most of us probably won’t end up paying less for cable. And, aren’t most of the cable channels owned by a few large media conglomerates–Disney, Viacom, Time/Warner (or whatever it is called now), NBC, Scripps, etc.? Call me cynical, but I don’t see them getting screwed by either unbundled or bundled cable service.
I’m a C-SPAN watcher. Comcast took off C-SPAN 2 out of my extended basic package and left C-SPAN 1 on. In order to get “2” I would have to sign up for a digital cable package. C-SPAN states they are not government funded and their cost of the programs are paid by the cable companies. WTF? How fair is that? I don’t want the shopping, church, and sports channels but I have to pay for them. No way I can afford digital cable. Call me screwed.