Tuesday, April 29, 2008

Why A La Carte Cable is a Bad Idea

A la carte cable pricing has been a goal of consumer and family advocates for quite a while. On the surface, it seems like a logical idea that you only pay for the exact channels you want while keeping objectionable content out of the house. In reality, it’s a horrible idea that would raise cable costs for just about everybody.

Don’t believe me? Consider this. ESPN charges about $3 per subscriber. If a la carte were implemented, assume they only retain 1/2 of their subscribers. That means just to remain revenue neutral on subscriber fees, they have to double the cost to $6 each. That will be repeated for every single station you want to receive. You’ll end up paying more for less. A lot of the smaller niche channels simply won’t be able to cover their costs and will shut down. This simple analysis doesn’t even take into account reduced advertising fees or the tremendous overhead of cable distribution that is absorbed equally by all subscribers today.



Written for ParentalTech.com by COD

3 comments:

Geoffrey said...

So what your saying is, the more poular channels give money to the less popular ones in order to keep them afloat? I doubt that.. so what is the payoff for being a popular channel? There are lots of ways cable compaies can make money, like selling the info on what pepole actually have signed up for to advertisers. Your argument is full of holes. No other industry makes you buy more than what you want. Imagine going to the post office and sending a pakage to California and being told you also have to send one to Rhode Island and Wyoming just because thats how the system works?
Or going to the grocery store and having to buy papayas with your apples because thats the way it is.

Think about it.

Monica4224 said...

Geoffrey,

Yes, the more popular channels do "give money" to the less popular channels. The reason for these subsidies is that these bigger and smaller channels are all owned by the same companies. For example, ESPN is huge, ESPN Classic, not so huge, but they are both owned by Disney, which has an interest in keeping both channels afloat.

So before you "think about it," make sure you check your facts first.

Geoffrey said...

Monica, if Disney wants to keep them afloat then thats Disney's choice, as for any other conglomerate. But I should not have to pay for that choice. Thats Disney's choice not mine.