[opendtv] Re: Pro a la carte, Another Perspective

At 3:28 PM -0700 12/14/07, Frank Eory wrote:
Cast my vote for continuing to have popular channels provide a partial subsidy to less popular channels, in the interest of diversity of content.

Can you provide any example of this, OTHER THAN the public service programming that broadcasters are required to carry or shows that are designed to demonstrate the social consciousness of the conglomerates? TV in the U.S. is still predominantly an advertiser supported medium that requires a mass audience to make money (virtually all of the networks that collect subscriber fees are advertiser supported, and these networks often operate in other parts of the world where they cannot collect subscriber fees.

Shows that cannot attract an audience don't survive. This is not to say that the conglomerates do not lose money on some of the shows they deliver; not to mention the fact that they also lose money on some of the most successful shows, at least until they are placed into syndication. But that's the nature of the beast. When you operate a network you need to fill up all of the time slots.

I agree that it is a costly exercise to develop a cable network, and that it takes deep pockets. But this is because those cable network slots are so valuable. But this is no different that starting up any business, and the congloms have a massive advantage in this compared to ANY independent producer. IN reality, minority program producers have some advantage over you or me, because the congloms need some minority oriented shows to demonstrate that they are serving ALL of the public.


Whichever study you believe and whatever the true economics are, one thing I am certain will be true: if a la carte is passed, the MSOs will use it as an excuse to effectively raise rates for subscribers who choose a large number of channels, similar to what they get now. If a subscriber has to pay for each individual non-broadcast channel and wants to keep his/her cable bill from increasing, he will be forced to take a good hard look at his personal viewing habits and leave some channels out of his subscription package.

I disagree with this. The congloms cannot afford to let the public pick and choose what they want to pay for. If I could pay for only the channels that I want, dozens of networks would not have access to my home. There are tow metrics that are important to cable networks:

1. The number of homes in which their content is available;
2. The ratings for the shows on these networks.

It is important to consider the fact that MOST TV programs do not reach a large audience. It is relatively easy to make money if you can reach 1 million homes, as long as the production costs are kept in line. The MAJORITY of broadcast network shows have only a few million viewers, and most cable network shows accumulate an audience in the millions over time by offering the same show in multiple time slots.

So in fact, MOST TV shows serve "minorities" not the mass market.

Faced with the possibility that a large percentage of homes might not pay for their cable networks, I believe the media conglomerates would drop subscriber fees to keep the first metric above in tact. For example, would USA network, which occasionally has a show or event like Wimbelton Tennis that appeals to a large audience risk losing most of that potential audience?

As others have speculated, this may end up hurting the minority-oriented and culturally highbrow channels the most. The channels with the hefty doses of sex and violence or "excessive stupidity" will be the ones with the most secure financial futures, since those are the ones most viewers prefer. John Shutt pointed out that you don't need to worry about the Chamber of Commerce, PTA and other PEG channels, since those are there by franchise agreement. True enough. But the more widely viewed minority-oriented, arts-oriented and education-oriented niche channels are not in the PEG group -- they are produced by for-profit businesses, and if voluntary monthly subscription fees from their viewers become key to their survival, it is right to be worried about their longevity under the a la carte model.

And these special interest channels would be THE FIRST to drop subscriber fees. On the other hand, ESPN would probably raise its monthly fee to cover the loss of all the subscriber fees from homes that don't watch sports. Almost ALL of the Fox sports networks are Ala Carte NOW, requiring a potential subscriber to subscribe to a separate digital tier.


If you value the content diversity these channels offer, you might be unpleasantly surprised if the economics of a la carte end up driving them out, or forcing them to cut production budgets. The only certainty offered by a la carte is that the lowest common denominator audience will always be served.

This  is NOT a certainty of ala carte. It is the reality of TV land.

Regards
Craig


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