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The Cable Industry's a La Carte Bait and Switch

Posted by Unknown on from the television-is-so-90s dept.

jfruhlinger writes "For years, cable operators have insisted that a la carte pricing, in which users could chose the channels they want, would undermine the both their own business models and the existence of important but less-watched channels currently wrapped into bundles. That's why it was surprising to hear that major cable companies are privately working towards offering a la carte pricing. But when you look at the details, it seems more like a bait and switch: those lesser channels (which pay cable companies for their place on the dial) will still be bundled with the local stations cable companies are required to provide, whereas pricey sports channels (which cable companies have to pay for) will become HBO-like premium services."

14 of 447 comments (clear)

  1. Makes sense actually by bruce_the_loon · · Score: 4, Interesting

    For those of us who don't like sport and don't like subsidizing those who do, this is a win. For a sport fan, it's a good way to part him from his money.

    --
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    1. Re:Makes sense actually by Fortunato_NC · · Score: 5, Insightful

      Your assumption is that once the sport channels are removed, the price of basic cable will fall. I am not sure that the cable companies are on board with you here.

      --
      Blogging Weight Loss, Distance Education, and more at verlin.com
    2. Re:Makes sense actually by s73v3r · · Score: 5, Insightful

      You realize that every damn thing you watch is subsidized by others as well, right? That you're not an island, and rely on others to split the cost of providing the channel with you just as much as they do for sports?

    3. Re:Makes sense actually by Amouth · · Score: 3, Informative

      my cable company raised rates so that basic cable + basic internet was 125$ a month.. i told them they could keep the bill and the service since they seem to value it more than i do.

      --
      '...if only "Jumping to a Conclusion" was an event in the Olympics.'
    4. Re:Makes sense actually by Rolgar · · Score: 3, Informative

      But revenue is not all profit. The cable company pays the sports channels for each subscriber that receives the channel. The cable company builds a tier and sets a price for it that includes the amounts that each channel demands. I don't know if the cable company's cost for the tier is the same as what you pay for the tier, or if the cable company adds in a little extra, but I suspect there isn't much profit there. If all of the Fox Sports, ESPNs, and the college sports networks are on a tier that costs the customer $50, I suspect that's about what the sports channels are demanding. If so, then the cable company doesn't really care if you get it or not because they don't lose any profits from you dropping that tier, their profits would all come from the amount you pay for basic service.

      The tiers then exist to keep customers happy, allowing those that would not buy any service without the premium content to get it, while others pay for the basic package. The cable company has every reason to give customers a low priced option for the basic package, because every additional basic subscriber is almost entirely profit because the basic channels are are nearly free, but the company still collects the fee for your basic service, which is why the cable company can bundle them for the basic price of service.

      If they are going to offer a la carte, I would like the smallest tiers possible. Besides basic, the only channels I'm really interested in are ESPN and my regional Fox Sports affiliate. Those are the only two channels that offer games I'm interested that aren't on my basic service tier. Going forward, I might be interested in an educational tier since our children are entering the age were they might benefit from access to the History channel as well as others. As it currently works, I don't think they offer tiers of completely similar programming because the companies that own the channels demand that all of their channels be on the same tier even if they don't really have the same market focus (ESPN, ABC and Disney Channel). Why do the companies do this? They only have to get you to want one of the channels, and they force you to pay for all of them. The cable company is just the middle guy who signs the contract that allows them to carry the service, then advertises you to buy the product.

      I find it ridiculous that every time a channel threatens to pull service from a cable station, the channel demands that customers call the cable company and tell them to negotiate with the company, which gives the channel negotiating leverage to ask for more money in programming fees, which will eventually be passed on to the customer in the next annual price increase. Every freaking time, I'm rooting for the cable company to hold out, starve the channel of viewers, so they'll eventually cave in without getting more money to the cable company to drive up the next round of price increases. But the channels always wait until right before some big game that will be on their channel (a playoff game involving a local team, or the NCAA tournament), then threaten to pull their programming so customers will frantically blame the cable company not realizing they are asking to pay more for their cable bill.

  2. You know... there is life without cable. by cpotoso · · Score: 5, Insightful

    Who needs it? I can get about 10 channels over the air, for free, most of them in HD. Then there is the internet (which comes from my cable company, but with whom I do not have any service other than internet). Don't like their pricing schemes, don't buy it. It is not air, water, food, shelter, education or transportation. It is really optional.

  3. Re:At this point, only bandwidth matters to me by bemymonkey · · Score: 3, Interesting

    +1

    It isn't a la carte until you can choose when, where and on what you want to watch your show.

  4. stupid suckers by Thud457 · · Score: 4, Insightful

    Cable?
    Is that where old people pay to get programming with ads?

    --

    the preceding comment is my own and in no way reflects the opinion of the Joint Chiefs of Staff

  5. How is this Bait and Switch? by drb226 · · Score: 4, Insightful

    The idea is to let you choose how much money you want to waste on TV. If you want the popular, lucrative channels, then you may pay for them. Or not. This is not a bait and switch. This is someone whining that they will now have to pay slightly more for the channels they want to watch, rather than forcing the rest of the viewership to subsidize them. Just because the cable companies will end up getting more money doesn't mean this is a bad thing for me; it just means that a lot of people are dumb enough to shell out more money for the dumb things they watch on TV.

  6. What are the Slashdot editors smoking? by LWATCDR · · Score: 4, Informative

    Just how is this bait and switch?
    "That's why it was surprising to hear that major cable companies are privately working towards offering a la carte pricing. But when you look at the details, it seems more like a bait and switch: those lesser channels (which pay cable companies for their place on the dial) will still be bundled with the local stations cable companies are required to provide, whereas pricey sports channels (which cable companies have to pay for) will become HBO-like premium services.""

    Okay so the channels that are cheap or that pay that cable companies will be "included" with the local channels. The channels that are expensive will be charged for! That is the single must fair and logical way of doing things that I have never heard.

    For years the cable companies where subsidizing the cost of ESPN buy bundling it with other channels. I wonder how many people will pay for ESPN when they see the real cost. Heck I think it is great. I could get the channels I want and pay the real costs of those channels.
    How the heck is this bait and switch. This is actually dumber than the summary that implied that using old missiles to launch satellites was something new.

    --
    See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
  7. unintentional humor alert by waddgodd · · Score: 3, Insightful

    I've seen this issue from both sides, as a consumer, and as working as a CSR for a cable company. The absolutely hilarious part here is that most consumers that want ala carte channels think that their cable bills will go down with ala carte. Needless to say, they won't. What will end up happening is they'll look at the ten or so most popular channels, make them total $20-$30/month, then make the rest of the other 200+ channels total up to the remaining $30-$50 that cable customers know and dislike. THEN the premiums get thrown in. So basically, ala carte will raise your bills for less service. What's not to like from the Cable company's standpoint?

    --
    Just because you're paranoid doesn't mean they aren't out to get you
    1. Re:unintentional humor alert by sycorob · · Score: 3, Interesting
      That doesn't make sense to me. Let's assume the cable company won't outright gouge you (big assumption, sure). They'll want to keep overall revenues the same. The ESPN family is more expensive per user, so they can break that out into its own package. Every other channel that pays to be put on cable (to get ad revenues) will be cheaper. The people that absolutely must watch live sports will have to pay more, or ESPN will have to get cheaper. People not interested in sports will not have to subsidize ESPN any more just to get a couple of premium channels.

      Cable is getting real competition from Over the Air and streaming content. They know they have to offer something compelling to get me to stay. If they can get me the basic channels + all of the science channels that are hard to find on streaming for a reasonable cost, I'll stay. If they can't, then I might leave. OTA is free, and free almost always beats better.

  8. Kill your TV! by roc97007 · · Score: 4, Insightful

    Ok, maybe not kill it, but wound it severely. We dropped cable a year ago and I tell ya, I really appreciate that extra $120 each and every month. It's like getting a raise.

    If you're in a place that will support it, real TV antennas are making a comeback. The price is modest and the content is free! And just about everything else is available off the internet, especially if you don't insist on watching it the very moment it's broadcast.

    I think cable TV is the dial-up service of this century. It's expensive, redundant and unnecessary, but is still popular for reasons that aren't entirely clear.

    A Comcast salescreature comes by about once a month and tries to sell us on switching to a package deal. I say I'm happy with what I have (fibre to the house). He says but your carrier is getting out of the cable business!!! You're not going to get cable TV anymore!!! In the same tone of voice you'd say They're going to cut off your Oxygen!!! I tell him yes, I don't get cable TV , just internet. He looks at me like the refrigerator salesman looked at the Amish couple. They just can't understand not wanting cable TV. It's AOL all over again -- they couldn't understand why I didn't need them anymore when I switched to broadband. "But what about email?" Free. "Our content?" Crap. "How are you going to get to the internet??" Broadband includes the internet, that's kinda the point. And so on.

    --
    Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
  9. Re:Sounds like what most people would want by jpstanle · · Score: 3, Interesting

    This may have been true for me a few years back, but Discovery Channel isn't compelling anymore. Most of it is scripted "reality" show drivel... Hardly any good documentaries like the good old days. MythBusters is good, and I still like Modern Marvels on the history channel, but most of that is available online through netflix or some other avenue. Nearly all new documentaries worth watching come from PBS or the BBC. These days the only 'documentaries' on the Discovery channel are pipedream speculation about absurd engineering projects that will never be built.