Canadian Telcos Lobby Against Pick-and-Pay TV

silentbrad writes with an excerpt from the Financial Post: "BCE Inc., Rogers Communications Inc., and Shaw Communications Inc. which together control two-thirds of the $8.3-billion broadcast distribution market, are lobbying against the so-called 'a la carte' model that would allow customers to pick and pay for individual networks, arguing the change would have disastrous consequences for programmers, such as Bell Media and Shaw Media. 'A regulation requiring that all programming services must be made available to consumers on a stand-alone basis would have far-reaching ramifications,' BCE, whose Bell owns 30 specialty networks, said in a submission to the Canadian Radio-television and Telecommunications Commission. 'Undoubtedly, a market shake-out, causing many specialty services to exit, would ensue.' The three big players, led by BCE, have told the CRTC they support the status quo of 'tied selling,' or the practice of grouping weaker-performing networks in with a popular channels, versus a new approach to sell channels individually. ... In the race for subscription dollars, rates for TV services across providers have risen sharply over the last decade as the number of specialty channels, each commanding its own fee, has soared. Net costs to subscribers climbed another 2.6% in 2011, while average bills now hover around $60 a month."

Comments

Dur

[Anonymous Coward]

Of course they lobby aginst it..

Nobody actually WANTS to pay for all those shopping, religious nut, cable access bullshit channels.

And yet someone has to pay for them. Because we can't just tell those channel execs 'your channel sucks and nobody wants it, we're dropping it'.

So they stay. And we all get to pay for crap we never wanted.

Re:Dur

[DesScorp]

Of course they lobby aginst it..

Nobody actually WANTS to pay for all those shopping, religious nut, cable access bullshit channels.

And yet someone has to pay for them. Because we can't just tell those channel execs 'your channel sucks and nobody wants it, we're dropping it'.

So they stay. And we all get to pay for crap we never wanted.

I think you're operating under a delusion here. Most of the country is quite religious, and thus the "religious nut" channels would do just fine under a "pick and pay" plan. So would the shopping channels (You think the shopping channels would die? Do you know any women at all?). Public access would probably be thrown in for free anyway, as they don't really cost much. You seem to think that the rest of the country thinks and feels as you do, and... I doubt that the case. Things like religious networks and sports networks would thrive.

No, what would have a harder time surviving are narrow interest, boutique channels. Things like "The International Film Channel" and such. Even the SyFy network might tank, as people would have to ask themselves "do I really want to pay for stuff like Megacroc vs. Giantshark"?

I've long wanted a cable cafeteria plan, as I'd pay for maybe three dozen channels and chuck the rest. I don't find anything on network TV worth watching anyway, so my DVR is filled with classic films from TCM, and things like certain sporting events and documentaries. I think there are more cable customers like me than you in the United States. Your MTV2's and CurrentTV would be in Heap Big Trouble in a market where people had to actually pay for them individually, methinks. If you like the boutique channels, maybe you should be thankful for the current system.

Re:Dur

[h4rr4r]

No, what would have a harder time surviving are narrow interest, boutique channels. Things like "The International Film Channel" and such. Even the SyFy network might tank, as people would have to ask themselves "do I really want to pay for stuff like Megacroc vs. Giantshark"?

Netflix easily replaces all of that for under $10/month. Amazon video gets even more of them. Channels are pointless in 2012. Why pay for stuff that is broadcast while you are at work? It should be ala carte for individual episodes/seasons/movies.

Re:Dur

[Penguinisto]

Damn - spent all the mod points yesterday. :)

I would add to that the prediction that most of the flagship Discovery Network channels would likely still rake in the monies (Discovery, Science, Travel, History, TLC, etc). TBS would hold out okay as well, but mostly because they're smart enough to capture and re-run the good sitcoms and dramas). Comedy Channel? It would probably do okay. Cartoon Network? Adult Swim (usually) makes it worth keeping. NatGeo? Likely would do okay, but that's only semi-certain.

I think channels like Univision and Telemundo would do pretty well also, but channels that cater to other ethnicities (Vietnamese, Korean, Persian, Russian, etc) would likely wither pretty quickly. Lifetime, Oxygen, and all the estrogen-laced channels? The channels in that niche would go all Highlander on each other (as in: there can be only one!). Others that would also see some hard intra-niche fighting would be Animal Planet vs. NatGeo Wild.

SyFy would die a well-deserved death, as would MTV (no, seriously - fuck 'em. Aside from Jackass, IMHO they've contributed little-to-nothing since 1995 or so that would justify its continued existence). Golf channel? Yeah, it'll die, but slowly (at the same rate its fan base does). The Weather Channel? Sadly, but yeah it'll die, or at least its TV component likely would.

The *really* niche stuff? Likely dead on arrival: Tennis channel, NASA channel, SOAP Network, etc.

All said though, I really don't mind a lot, with one caveat: The survivors would concentrate on either the lowest common denominator (booo!) or on producing the best damned content available. OTOH, from a parenting perspective, it returns power to Mom and Dad ("Dear teenage kid: if you want to watch that channel here, it'll cost you $n per month, so I suggest you go get a job.")

So what?

[mewsenews]

Why are the popular channels subsidizing poor-performing specialty channels? What's the logic in that? Why is the cable company carrying a channel that's not profitable?

Their argument rings so damn hollow it's ridiculous.

da fuq?

[girlintraining]

...a market shake-out, causing many specialty services to exit, would ensue.

The raisin de etre for cable tv is specialty service. All that non-sense about buying 'packages' is a way for the company to extort more money from customers.The channels have to put advertising in place to support themselves; They do not get that subscription money, and they wouldn't under a 'pick and choose' model anymore than they do now. But what it would do is force cable companies to disclose which assets are valuable and which are not, meaning those channels could then dictate terms to the cable companies, instead of the other way around; It would be an accurate way of figuring out how many people actually watch your channel, rather than relying on 3rd party services to provide that information.

So no. It wouldn't result in a market 'shakeout'.... and if it did, that's capitalism in action. Don't you support capitalism, oh great Cable TV executive with your very fancy hat? What you're really saying is your profits would be lower because you'd have to be honest about the numbers, rather than being able to use (achem) creative accounting.

This is why I stopped watching TV

[Dakiraun]

It's been around 10 or 11 years now since I stopped watching TV. The ridiculous monthly costs combined with the facts that 2/3 of the channels are uninteresting and those that are are filled with up to 40% commercial time, I just thought to myself one day "Why am I paying for this?"

Since canceling my cable, I chose to watch shows that I was interested in by on-line streaming or by just getting the DVDs, and that's worked out great so far. The added perk is that I'm not exposed to ANY commercials at all. The big Telco's have got to come to the realization sooner or later that embracing the more modern ways of media distribution is a lot more profitable and beneficial than constantly opposing them. They seem to forget that it is the consumer than "wants" the shows, and their job to deliver what the consumer wants, not what they think the consumer wants.

If they don't step into the 21st century soon, more and more folks are just going to do what I did and stop giving them any money at all. Personally... I think it was one of the best things I've ever done; I haven't a clue where I'd find time to sit in front of a TV nowadays.

Re:what's broadcast?

[Anonymous Coward]

I also ducked out on satellite. It's streaming and over the air local channels with a UHF antenna for me now.

I use a Roku box (actually a couple of them), and have a Netflix and Amazon subscription.

I haven't ever looked back and certainly don't miss all the religious and shopping channels.

With streaming I can do a la carte subscriptions. Cable and satellite need to get with the program or wither and die on the vine.

No ESPN subsidy

[Fujisawa Sensei]

I want a package with I can get things like Discovery, Syfy, and Cartoon Network, without subsidizing ESPN or any sports channel or religion channel..

A (Hopefully) Better Explanation for Bundling

[LordNicholas]

I work for a major cable network- here's a hopefully better explanation of why we've stuck with the bundling model.

A cable channel gets its revenue from two main sources- cable subscription fees from the cable provider (~70%) and ad revenue (~30%).

Let's assume we have a cable channel that is currently bundled, and in 100% of households with TVs, with revenue of $100 million a year. We're getting $70 million from cable subscriptions, and $30 million from ad revenue.

Now let's say we switch to a-la carte, but 100% of households still want to subscribe at a price that leaves us revenue-neutral. The cable channel says "great! we're still getting $70 million from subscriptions and $30 million from ad revenue. Everybody wins."

But, let's say only 50% of households would be willing to subscribe, but they're willing to pay double the price because they love the channel. We're still making $70 million from subscription fees. However, we're now only in 50% of households, which means we're much less attractive to advertisers. We're not going to keep making $30 million from ad revenue, because advertisers often need a "critical mass" of households reached in order to make a deal. This isn't a linear relationship- 50% of households doesn't mean 50% of ad revenue, it could mean 0% because we don't have the scale to make an ad deal worthwhile for the advertiser.

So now we've only got $70-85 million a year, which means we have less money to spend on programming. Program quality suffers as a result, and so the next year maybe only 25% of households are willing to subscribe. We're now in a downward spiral.

TL;DR - unbundling has the unfortunate side effect of reducing program quality for specialty channels. Only the cheapest shows (ie, crappy reality shows) or the ones appealing to the lowest common denominator (ie, CBS's entire lineup) might survive in the long-term.

Why bundle

[swm]

It isn't evil; it's just bundling, and there is a reason for it.
Simple example (from the newspaper days)

Alice values the fashion section at $0.20 and the sports section at $0.10.
Bob values the sports section at $0.20 and the fashion section at $0.10.

If the publisher prices both sections at $0.10, he sells 4 sections and makes $0.40.
If the publisher prices both sections at $0.20, he sells 2 sections and makes $0.40.
But if the publisher bundles the two sections together and prices the bundle at $0.30, he sells 2 bundles and makes $0.60.

Re:what's broadcast?

[Midnight Thunder]

In Montreal we have six OTA digital channels (Radio Canada, CBC, CTV, Global, Télé Quebec, V).

I opted to not go with cable, IPTV or satellite because of the quantity of commercials on top of the fee I have to pay for these packages. I hate most are shows that spend more time announcing what is going to come on next and what they just showed, amounting to five minutes of real content in 20 minutes. I have Netflix and I am very happy. All I would like now is to be able to watch Crunchyroll via Plex.

Re:what's broadcast?

[realityimpaired]

Funny how A la carte works in the U.S. but for some reason can't work in Canada

A la carte does work in Canada. Both Videotron and Bell are doing it in Quebec. It doesn't seem to be hurting the channels at all.

And if it leads to the end of a channel that nobody watches, how is this a bad thing?