[opendtv] Re: Another FCC Report on a la carte programming

  • From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
  • To: <opendtv@xxxxxxxxxxxxx>
  • Date: Mon, 5 Dec 2005 11:14:02 -0500


By Marguerite Reardon
Staff Writer, CNET News.com

Published: December 5, 2005, 4:00 AM PST


ESPN is a good example of how bundled programming works. Its
main channel is one of the most popular in most basic cable
packages, and one of the most expensive. To help justify the
price it often throws a few less-popular channels, such as
ESPN2, into the bundle. If Disney sold each of its channels
separately, it would likely sell more subscriptions to the
flagship ESPN channel and fewer subscriptions to the lesser
known channels. With fewer viewers, advertising revenue on
those less-popular channels would likely go down as well. As
a result, ESPN would have to charge more for the more-popular
channel to offset losses on the less-popular channels.

But consumer advocates say that a free market will eventually
work in consumers' favor. Not only will prices be forced to
fall to attract viewers, but programming will likely get
better because content providers will compete more
aggressively for viewers.
---------------End excerpt----------------

Just because prices of consumer electronics products have had
a history of dropping over time, we should not automatically
put all other products or services in this same category. In
fact, the CE industry is rather unique in this regard.

Not wanting to repeat what I already wrote, I was trying to
figure out what Craig's thinking would be.

Content providers get paid a certain amount per month for every
subscriber that gets their content. So if unwilling subscribers
are not counted, Craig might say, perhaps the content creator
would be the only one affected. His revenues would go down,
and the revenues available to the service provider would not
necessarily be affected. This would reduce the average cable
bill for the average customer.

Perhaps. Along with this, though, if ESPN revenues are reduced,
one can also expect (a) ESPN programming quality to be reduced,
or (b) the cost of the ESPN tier to be increased. Something has
to give, basically.

ESPN is just one example of desirable content, from the point
of view of many cable subscribers. Other examples exist too.
It's these high value programs that cost money to subscribers
(in addition to plant maintenenance and admin), not the other
stuff bundled in there. A la carte can only cause high value
programs to cost more, and the other stuff to disappear more

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