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

  • From: Bob Miller <bob@xxxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Mon, 05 Dec 2005 13:50:11 -0500

Manfredi, Albert E wrote:

>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
Don't agree that these are the only possibilities.

High value programs will only cost more for those who still subscribe to 
them. They will cost nothing for those who opt out. That would be 70% of 
those who now are forced to pay for ESPN.

Those that opt out would then have more funds to spend on programming 
they really want. The mix would change and other programming could 
benefit a lot.

This might mean that some "other stuff" not only doesn't disappear but 
finds a lot more customers.

Bob Miller
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