[opendtv] Re: Analysis: The Real Winner in the TV Wars

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Tue, 7 Dec 2004 08:44:37 -0500

At 10:11 AM -0500 12/6/04, Manfredi, Albert E wrote:
>Craig Birkmaier wrote:
>>  Why are the media conglomerates vertically integrating
>>  around content? Perhaps this line from the following
>>  story provides a clue...
>>  > Why are rates rising in an era when inflation is so
>>  > low? The cable and satellite industries are paying
>>  > dearly for programming, which accounts for about 50%
>>  > of their operating budgets.
>This is silly. The simple answer is, "Rates are rising
>because the cable and DBS companies can increase their
>rates and people still pay." If people are willing to
>pay, and the sale is not illegal, there's nothing to
>stop the seller from increasing his price. And the price
>by definition reflects the value placed on the product.
>>  Consumers are the big losers, as they are forced to
>>  pay more and more for advertiser supported content.
>Consumers are only the losers if they're coerced to pay.
>They are not. There's no gun to anyone's head. This is
>just entertainment, for heaven's sake.

I am not coerced to drive either...it is simply a necessity like 
electricity, water, telephone and cable (or DBS).

I do not have much control over the cost of my car insurance (other 
than keeping my record clean).  I do not have ANY control over the 
cost of gas, other than driving around looking for the cheapest 
price. And I do not have any control over the escalating cost of 
vehicles due to government mandates on "stuff" that must be included 
in every vehicle.

The only valid thing in your post is the reality that the pricing for 
multichannel TV is not so high as to cause people to reject the value 
proposition. Or another way of saying this is that even at these 
ridiculous prices, cable and DBS are still a better value than OTA 
the OTA TV proposition.

We could all eat hot dogs and  hamburgers every night instead of 
steak and grilled seafood. But many people are willing to spend a bit 
more for a higher quality product.

None of this changes the fact that the media conglomerates continue 
to push the cost of their content every higher, because they have so 
much leverage over the content distributors. This leverage is 
provided in part through their content oligopoly, and in part because 
of government regulations that allow the media conglomerates to hold 
broadcast content hostage in order to push up the price on other 

All of this is NOT unusual when the government steps in to regulate 
what should be an open marketplace. I now routinely see add on fees 
on many bills with "regulatory recovery fees."

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