Thursday, May 30, 2013

How Can We Reduce Cable Bills? Unbundle Sports

Tim Berners-Lee is mostly right here. Pure a la carte cable pricing wouldn't drastically reduce cable bills. The rise in cable prices is due mostly to affiliate fees, which go mostly to the sports channels. Affiliate fees are collected on a per-subscriber basis, which is why there are frequently contentious negotiations between cable operators and content providers, along with constant nagging to "call your cable operator and ask them to add the Underwater Field Hockey Network". It's also why we've seen an explosion in sports channels in the last few years, as all of the major broadcast networks, some college sports conferences, and even individual sports teams have launched their own cable networks. These organizations are behaving perfectly rationally, given the seemingly insatiable demand for sports programming and the increased relevance of sports to live TV delivery, as more and more viewing moves to DVRs and IP-based delivery mechanisms. This is a pure money grab by the sports channels, but under the circumstances, why should the Pac-12 or the LA Dodgers let ESPN capture all the surplus from the popularity of their programming?

These changes are worst for the consumers who watch only a modest amount of sports programming, or who watch channels that are bundled only with the sports-level tier. We could go a long way towards improving cable by requiring cable companies to put all sports channels on an entirely separate package. A second step would be to require a la carte pricing only for sports channels, though that might lead to lots of arguments about which channels are truly "sports" channels. Is SpeedTV a sports channel? Is the Golf Channel if it only carries live golf for two days a week for half the year?
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