# Ala Carte, careful what you ask for



## tsmacro (Apr 28, 2005)

One analyst thinks ESPN could cost $36 per month on its own

Read more: http://www.fool.com/investing/general/2015/04/01/espn-for-36-analyst-shows-true-cost-of-a-la-carte.aspx#ixzz3W5vszjwo


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## lwilli201 (Dec 22, 2006)

There or those that just do not, and never will, understand the economics associated with a la carte. The channels in the list shown in the above link without ESPN would be $42.51 for 6 channels. There could also be a fee for using a la carte, say $10.00. They charge for everything else, why not for that privilage. And additional fee for locals if you want them. Then if a one time program you would like to watch on another channel comes along, you are out of luck. When you pay for a package, you are paying for access. When you pay you internet bill, you are paying for access, but you will never visit every site available on the internet.


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## lparsons21 (Mar 4, 2006)

You both realize that there are asking prices that sometimes just don't get traction? Followed by either dropping the product line, or getting a price that will sell.

My opinion is that ESPN could ask for $36/month or even much more, but the $36 would not last long as few would be interested.


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## lwilli201 (Dec 22, 2006)

lparsons21 said:


> You both realize that there are asking prices that sometimes just don't get traction? Followed by either dropping the product line, or getting a price that will sell.
> 
> My opinion is that ESPN could ask for $36/month or even much more, but the $36 would not last long as few would be interested.


I would tend to agree with you. ESPN and other popular channels would never agree to a la carte. I just do not see a way every provider could maintain their current revenue. A channel that gets $.05 per viewer does have some viewers. Those channels would die unless they got some compensation for lost viewers. A fee for the privalege of having a la carte would be the answer. The article above would suggest that those would be the prices if those channels went totally a la carte and would not be other wise available. With the combination of availability in a package or a la carte, it would be hard to extrapilate the a la carte price.


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## lparsons21 (Mar 4, 2006)

Looking at some of the streaming options that are coming into play, I've come to a tentative conclusion or two.

1. HBO Now coming in at $15/month pretty much sets the top bar for a premium channel. I would assume that IF Showtime/Cinemax/Starz decide to do the same thing, their prices would be something lower than that. It will be interesting to see in 6 months or so, just how well HBO Now does.

2. ESPN would have to come in lower than HBO I think as few think 'premium' when they think of ESPN.

3. With CBS offering their channel and archives at $6/month, assuming they really get enough subs to make it work for them, the bar for a broadcast channel would be set @$6/month.

4. Cable type channels are the interesting ones. Since almost everything they produce now is available on Netflix/Amazon Prime/Hulu Plus, I think they would have the toughest time of it. And that's really only talking about the best of the cable type channels. The lesser ones would go begging I suspect.

What that really means is that we are still quite far from an Ala Carte/Streaming world because if you start totaling some of that up, it quickly becomes apparent that cable/sat with their packages is not that far apart in actual cost. Sure there would be some few that could/would cut down the channels they watch, but the bulk of us would most likely take a pass.

I know that I've considered twiddling my subs a bit. I'm on cable and can get all the channels I actually care about for around $50/month+whatever premiums I want. I'm not hung up on seeing the latest and greatest shows when they are offered, so I will be shuffling Premium subs and binge watching or possibly just buy the series.


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## dpeters11 (May 30, 2007)

But, HBO is essentially $15 a month for one channel. Most people that subscribe to HBO don't do it for the movies. ESPN would be all the various ESPN channels.


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## camo (Apr 15, 2010)

That article is exaggerating. Price will be set by demand, even the $15 HBO cost isn't set in stone. The real issue is how many garbage channels would go under if everything was alacarte.


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## Tom Robertson (Nov 15, 2005)

camo said:


> That article is exaggerating. Price will be set by demand, even the $15 HBO cost isn't set in stone. The real issue is how many garbage channels would go under if everything was alacarte.


No, he's setting the price based on "maintaining the current profit margin" and the number of viewers. We all know the market will set the final price.

My premise is the lowest cost channel today adds only a penny a month to your cable bill. In an ala carte system, that same channel will have to charge a minimum of $12/year just to cover the overhead of billing. Very quickly the overhead adds up, and everyone will find their overall bill will stay the same--with many fewer choices.

Peace,
Tom


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## SayWhat? (Jun 7, 2009)

If the Jock Channel were to get unbundled from decent entertainment and go Ala Carte instead of being shoved down everyone's throat, one thing is certain. Their viewer base will drop. Significantly. Maybe by half, maybe more All the millions that don't want them won't pay for them individually.

What would happen after that is a different matter. Their rates may go up significantly to offset the loss. Or they may go down once they realize people won't willingly pay any more than $X/mo.


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## camo (Apr 15, 2010)

Tom Robertson said:


> No, he's setting the price based on "maintaining the current profit margin" and the number of viewers. We all know the market will set the final price.


Oxymoron, If the market sets the price as it eventually will, maintaining current profit margins goes out the window. If they can't provide the product at the price people are willing to pay they go under. I for one could care less if profit margins decline and programming few watch goes under, those 1 cent channels sure add up.


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## James Long (Apr 17, 2003)

If the major sports channels lose viewers the content will go elsewhere. The price will then go down for the formerly major sports channel while we pay more for whatever channel the sports went to.


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## SayWhat? (Jun 7, 2009)

^^ But they may be dispersed more widely as opposed to being crammed into one system by mega-contracts.

So, there may be 20 channels with some content at lower prices instead of everything on one channel at a higher price. Whether or not you could get all the content you want from 5 or 10 of those channels at a lower overall price than the one big one is a different matter.


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## Tom Robertson (Nov 15, 2005)

The whole television industry is coming to point where radical change is likely necessary. Customers can't continue to pay increases at rates higher than everything else. DIRECTV and other providers can't eat the difference between what channels want and what customers will/can pay. 

Probably innovation will be the change agent, much as it has been for music. Obviously we're seeing more content delivered via stream. 

But sports is the big $$. It typically is watched live, great for advertisers. And huge demand. 

And broadcast prime time, though it is more readily time-shifted, draws big $$. But costs as well. Technology can lower the production costs, but as money gets tight, we'll see some balancing with the talented creative people.

I expect we'll see major changes. But I don't see ala carte. Package groups, yes. Libraries like Netflix, amazon, etc. Yes. In other words, new packages, not ala carte.

Peace,
Tom


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## joshjr (Aug 2, 2008)

We have all been saying this for years. Nice to see someone put some numbers to it. My question would be how does anyone ever expect to see a new channel kicked off if we go a La Carte? I think we all know we pay for channels we don't watch and we all want out bill to be lower. I have zero doubts in my mind that if I paid for only the channels I do watch my bill would be just as high if not higher. In the end we all win with bundled packages. The other elephant in the room is that the Locals will know their viewership is way more than anyone else and think they deserve more than ESPN monthly. I can only imagine what would happen if the locals each set their price with us or our provider. 200% increase here and 300% there. How long before we are going with one local channel instead of them all. Its a mess for sure but better now then what it would be with a La Carte.


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## joshjr (Aug 2, 2008)

Tom Robertson said:


> The whole television industry is coming to point where radical change is likely necessary. Customers can't continue to pay increases at rates higher than everything else. DIRECTV and other providers can't eat the difference between what channels want and what customers will/can pay.
> 
> Probably innovation will be the change agent, much as it has been for music. Obviously we're seeing more content delivered via stream.
> 
> ...


Well said I agree. Something is going to give sooner or later.


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## Tom Robertson (Nov 15, 2005)

camo said:


> Oxymoron, If the market sets the price as it eventually will, maintaining current profit margins goes out the window. If they can't provide the product at the price people are willing to pay they go under. I for one could care less if profit margins decline and programming few watch goes under, those 1 cent channels sure add up.


I misspoke. He is calculating a possible price, not setting one.

You don't care--until the one channel that costs you a penny today costs $3. And the rest of the channels you watch end up costing exactly what you're paying right now.

Or you want to add a channel that would have been free before and now it costs $5.

Netlix, hulu, amazon, vudu, etc. will all add up too.

Peace,
Tom


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## James Long (Apr 17, 2003)

SayWhat? said:


> So, there may be 20 channels with some content at lower prices instead of everything on one channel at a higher price. Whether or not you could get all the content you want from 5 or 10 of those channels at a lower overall price than the one big one is a different matter.


At the end of the equation how much we consumers pay is what matters. Paying more for the 5 or 10 of the future 20 channels than one pays for all the content today, plus inflation. I also expect that some of those "20" channels will be general entertainment channels ... where people who don't want sports will end up paying more for a channel they are buying for content they want, but still have to pay the "sports surcharge" for other content on that channel.

Even getting away from the linear channel and getting content via streaming is becoming package oriented. It will not be easy to buy just the list of shows you want for less than a package price. Unless of course the show list is short.


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## slice1900 (Feb 14, 2013)

lparsons21 said:


> 1. HBO Now coming in at $15/month pretty much sets the top bar for a premium channel. I would assume that IF Showtime/Cinemax/Starz decide to do the same thing, their prices would be something lower than that. It will be interesting to see in 6 months or so, just how well HBO Now does.


I don't think the pricing for HBO has anything to do with ESPN. Ask the average sports fan who also watches the shows on HBO which they would give up first. They'll give up HBO first, because the movies don't matter and there are other ways to watch the shows on HBO if you're willing to wait a bit - Netflix will even rent you the seasons on DVDs!

Even if there were options to watch ESPN's programming weeks or months later few would be interested. People want to watch sports live, not a month after the game. DVRs made people used to watching other programming delayed, and Netflix made them used to binge watching entire seasons at once - meaning you have to start months after the first episode airs.

I have no idea what the revenue maximizing price for ala carte ESPN would be, but it'll be higher than HBO.


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## slice1900 (Feb 14, 2013)

joshjr said:


> The other elephant in the room is that the Locals will know their viewership is way more than anyone else and think they deserve more than ESPN monthly.


You think they don't know that already? Why do you think the networks are asking the local stations for more and more money, forcing them to ask the cable/satellite providers for more and more money?

The locals are limited in their ability to ask for fee increases because the more they charge the more it pushes people to put up an antenna and pick up their station for free. Even though that's not an option for everyone, every viewer that does that is permanently out of the pool of people they can charge. When people have cable/satellite providing them locals in a bundle few have incentive to do this because they don't save any money. If the cable/satellite providers unbundle them that changes the math. My cable provider at home has a $2.97 local broadcast delivery fee, which will continue to rise as contracts are renegotiated and the locals ask for more.

Breaking that out lets people know what they are paying for, that's the first step (like Directv's RSN fee) If Mediacom starts getting enough grief from customers as that charge goes up and up it'll put pressure on them to allow customers to refuse locals as part of their future renegotiation with local stations. I'm sure that would be contentious but even a smaller cable company like Mediacom has the finances to hold out on that a lot longer than the locals do, so they'll be forced to cave. If it got to the point where the cost to put up an antenna was recouped in a year, and the cable company made it easy on you by providing an AM21 equivalent or built in ATSC tuner, I'm sure I'd see antennas sprouting up all over the place - including on my house!


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## SayWhat? (Jun 7, 2009)

James Long said:


> If the major sports channels lose viewers the content will go elsewhere. The price will then go down for the formerly major sports channel while we pay more for whatever channel the sports went to.





James Long said:


> At the end of the equation how much we consumers pay is what matters. Paying more for the 5 or 10 of the future 20 channels than one pays for all the content today, plus inflation. I also expect that some of those "20" channels will be general entertainment channels ...


Thought we were referring to the dispersal of sports content to multiple sports channels instead of one (current) sports conglomerate channel.

Course, there's how many sports channels now? 50? 60?


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## lparsons21 (Mar 4, 2006)

slice1900 said:


> I don't think the pricing for HBO has anything to do with ESPN. Ask the average sports fan who also watches the shows on HBO which they would give up first. They'll give up HBO first, because the movies don't matter and there are other ways to watch the shows on HBO if you're willing to wait a bit - Netflix will even rent you the seasons on DVDs!
> 
> Even if there were options to watch ESPN's programming weeks or months later few would be interested. People want to watch sports live, not a month after the game. DVRs made people used to watching other programming delayed, and Netflix made them used to binge watching entire seasons at once - meaning you have to start months after the first episode airs.
> 
> I have no idea what the revenue maximizing price for ala carte ESPN would be, but it'll be higher than HBO.


While most of what you say is valid, HBO has set the value of their Premium service and it has always been right there to see. ESPN OTOH, has a cost that no one sees as a line item on their bill and never has, and that presents a problem for them should they ever offer a standalone ESPN choice. Since there has never been a price given for ESPN, a high price would be a much tougher sell imo.

Ask almost anyone what ESPN costs them on their sat or cable service and you'll hear thundering silence! That makes a price higher than HBO an almost certainty not to happen. As much as I like ESPN I wouldn't pay them $15/month and I doubt many others would either.


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## slice1900 (Feb 14, 2013)

I agree that the cost of ESPN is hidden, but since this is a theoretical exercise of "what if channels were offered ala carte" then everyone is changing the cost for all their packages to $0 and deciding what channels to add. They might find $15 let alone $36 hard to swallow for ESPN since they didn't think of it as an expensive channel, but the question is what they feel the value is to them. They will have to decide whether to unbundle based on whether they can save money building a list of channels versus the package deal they get today. Unless the idea is that unbundling is forced on everyone and packages are no longer available.

Sports networks (and therefore the leagues) would have to take a pay cut if unbundling was offered, because the people who can save money would unbundle, and almost all those would be non sports fans since it would be hard to imagine someone who wanted ESPN, TNT, TBS, RSNs and so forth would be willing to pay enough to preserve their revenue. I'll bet if you calculated the price for RSNs using the same formula in that article many of them would end up costing more than ESPN. If the Dodgers Channel is trying to get $5/head, but only 2% of the market was actually watching the channel, they'd need to charge $250/month and get all those 2% to subscribe. Seems unlikely 

Unbundling is going to be forced the hard way of course, by cord cutting. People who don't watch sports care less and less about watching programming right away. They may miss out on the water cooler discussions about what happened in last night's Walking Dead, but some channels make their content available for free a week or two later, others make it available on Netflix or Hulu for binge watching once the season is over. When that trickle becomes a flood, instead of getting more revenue every year, ESPN will start getting less revenue each year. They can respond by trying to raise the price, but that will just increase the rate of cord cutting among non sports fans. Look forward to a lot of strikes and lockouts in pro leagues once it hits their bottom line and millionaires face off against billionaires each wanting bigger pieces of a shrinking pie.

Colleges will be forced to stop the insane arms face of building more and more Taj Mahal like facilities and coach's salaries approaching 8 figures when they can't count on continual revenue increases. The upcoming B1G contract renewal for BTN and ESPN may be the last bite at that apple. By the time the renewal rolls around for the SEC in the early 2020s, they may not only not get what the B1G will get, but will get less than they got before.


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## lparsons21 (Mar 4, 2006)

Yeah, sports in general would have a big problem with streaming/cord cutting. So far they've been able to dodge that bullet by pretty much not offering much at all. I'm a boxing/golf fan and neither of those are available anywhere to stream in any meaningful way. Boxing streams seemed to be 'classic' matches from years ago, nothing contemporary. Golf doesn't even have that much except during some iconic matches.


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## Gloria_Chavez (Aug 11, 2008)

slice1900 said:


> Even if there were options to watch ESPN's programming weeks or months later few would be interested. People want to watch sports live, not a month after the game. DVRs made people used to watching other programming delayed, and Netflix made them used to binge watching entire seasons at once - meaning you have to start months after the first episode airs.
> 
> I have no idea what the revenue maximizing price for ala carte ESPN would be, but it'll be higher than HBO.


What you're missing is that, per Charlie Ergen, only 20% of his subs watch ESPN. The other 80% pay the "sports tax" so that the ESPN fan doesn't have to pay the full 25 to 40 dollars that ESPN would otherwise cost.

One other issue that very few appreciate. The possibility that ESPN and Time Warner may have to write-off a significant portion of their contracts. A sports distributor had to declare bankruptcy in Houston (for Astros baseball), and Time Warner may never see a return on the 2.1M per game it must pay the Dodgers.


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## harsh (Jun 15, 2003)

Tom Robertson said:


> In an ala carte system, that same channel will have to charge a minimum of $12/year just to cover the overhead of billing.


A la carte doesn't require direct billing of the customer by the content provider. The MCVP can continue to aggregate the various selections just as they have at the bundle level since the beginning of subscription television. The big issue would be the invoice detail. Surely this would have to be done in the digital domain.

There would obviously be a substantially greater amount of transactions for both the provider and the MCVP but the cost of that is relatively low where Electronic Data Interchange is involved.


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## damondlt (Feb 27, 2006)

lparsons21 said:


> Ask almost anyone what ESPN costs them on their sat or cable service and you'll hear thundering silence! That makes a price higher than HBO an almost certainty not to happen. As much as I like ESPN I wouldn't pay them $15/month and I doubt many others would either.


I wouldn't pay ESPN $5 a month. If I could drop the suite of channels and save $20 or $30 I would.


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## joshjr (Aug 2, 2008)

slice1900 said:


> You think they don't know that already? Why do you think the networks are asking the local stations for more and more money, forcing them to ask the cable/satellite providers for more and more money?
> 
> The locals are limited in their ability to ask for fee increases because the more they charge the more it pushes people to put up an antenna and pick up their station for free. Even though that's not an option for everyone, every viewer that does that is permanently out of the pool of people they can charge. When people have cable/satellite providing them locals in a bundle few have incentive to do this because they don't save any money. If the cable/satellite providers unbundle them that changes the math. My cable provider at home has a $2.97 local broadcast delivery fee, which will continue to rise as contracts are renegotiated and the locals ask for more.
> 
> Breaking that out lets people know what they are paying for, that's the first step (like Directv's RSN fee) If Mediacom starts getting enough grief from customers as that charge goes up and up it'll put pressure on them to allow customers to refuse locals as part of their future renegotiation with local stations. I'm sure that would be contentious but even a smaller cable company like Mediacom has the finances to hold out on that a lot longer than the locals do, so they'll be forced to cave. If it got to the point where the cost to put up an antenna was recouped in a year, and the cable company made it easy on you by providing an AM21 equivalent or built in ATSC tuner, I'm sure I'd see antennas sprouting up all over the place - including on my house!


I feel a little different about it I guess. I have read off and on for the past few years that the locals may shut off OTA. If we truly went to an a La Carte system and ESPN shot their price up, I do believe the locals would shut off OTA and jack up their rates. It would be the only way they could force their price on people. That may or may not happen but I think anyone who thinks OTA has no chance of going away is a fool.


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## jimmie57 (Jun 26, 2010)

joshjr said:


> I feel a little different about it I guess. I have read off and on for the past few years that the locals may shut off OTA. If we truly went to an a La Carte system and ESPN shot their price up, I do believe the locals would shut off OTA and jack up their rates. It would be the only way they could force their price on people. That may or may not happen but I think anyone who thinks OTA has no chance of going away is a fool.


1 Fool here. They make plenty of money and local TV is considered a necessity for many reasons that I will not get into.


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## slice1900 (Feb 14, 2013)

Gloria_Chavez said:


> One other issue that very few appreciate. The possibility that ESPN and Time Warner may have to write-off a significant portion of their contracts. A sports distributor had to declare bankruptcy in Houston (for Astros baseball), and Time Warner may never see a return on the 2.1M per game it must pay the Dodgers.


These changes will not happen quickly enough for ESPN to have to take a write off. They don't renegotiate their contracts with all providers and sports leagues in the same year, they are staggered over the years. They will have visibility into changes in their expected future revenues when decreases in cable/satellite subscriptions impact their current revenue This will feed back into their future costs in terms of what they are willing to pay sports leagues. The bigger impact will be on the sports leagues who would see ESPN willing to bid less than they hoped for or expected.


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## slice1900 (Feb 14, 2013)

joshjr said:


> I feel a little different about it I guess. I have read off and on for the past few years that the locals may shut off OTA. If we truly went to an a La Carte system and ESPN shot their price up, I do believe the locals would shut off OTA and jack up their rates. It would be the only way they could force their price on people. That may or may not happen but I think anyone who thinks OTA has no chance of going away is a fool.


At that point they are no longer a local broadcaster. Cable/satellite companies are under no obligation to carry them, and if there is no CBS station in a DMA, for instance, they can provide the national feed (NYC or LA) They still have to pay the networks for that, and maybe that's where the networks want to get to, but the local broadcasters and their holding companies like Sinclair will not willingly disappear.


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## joshjr (Aug 2, 2008)

slice1900 said:


> At that point they are no longer a local broadcaster. Cable/satellite companies are under no obligation to carry them, and if there is no CBS station in a DMA, for instance, they can provide the national feed (NYC or LA) They still have to pay the networks for that, and maybe that's where the networks want to get to, but the local broadcasters and their holding companies like Sinclair will not willingly disappear.


Where is it stated that a local broadcaster must offer OTA to be considered a local broadcaster?


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## Gloria_Chavez (Aug 11, 2008)

joshjr said:


> That may or may not happen but I think anyone who thinks OTA has no chance of going away is a fool.


If there were to happen, the OTA stations would have to forfeit the spectrum back to the government.

And the value of that radiospectrum is about 25B dollars.


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## Stewart Vernon (Jan 7, 2005)

Gloria_Chavez said:


> What you're missing is that, per Charlie Ergen, only 20% of his subs watch ESPN. The other 80% pay the "sports tax" so that the ESPN fan doesn't have to pay the full 25 to 40 dollars that ESPN would otherwise cost.


But... you say that as if roughly the same couldn't be said about EVERY other channel Dish carries. Dish has (rounding) 14 million subscribers. Is there any channel that can consistently claim more than 20% of that viewership? There can't be many based on the ratings I see for various networks.

Why ESPN gets singled out is beyond me... Take ESPN out... it's not a la carte and maybe it is $5 or maybe it is $25... now what? With those viewers having to pay that price for ESPN they now drop to the most basic package and no longer subscribe to other tiers so they can get their ESPN... meanwhile those other channels lose those subscribers and they now want/need more money. Those channels go away and your bill stays the same price OR those channels get an increase and your bill goes up.

That $5 drop from not being forced to take ESPN will be made up FAST by other channels.

Want everything a la carte? Ok, then ever channel probably wants $5 as a starting point... even if they only get $2, that's MANY times bigger than what they used to get... and Dish isn't going to stay in business letting people have one $2 channel and a $5 bill with surcharges... so you'll have to buy some minimum amount of channels anyway. Most of your channels will go away for lack of interest at any price... the remaining channels will raise as much as they can because they need it and because you have less choice.

In very short order your bill will be the same or higher and far less channels. Yeah, you won't be forced to pay for ESPN and I won't be forced to pay for your channels... but neither of us will have very much to watch and we'll be spending the same amount each month.

Yay!

(that last bit was sarcastic)


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## Tom Robertson (Nov 15, 2005)

joshjr said:


> Where is it stated that a local broadcaster must offer OTA to be considered a local broadcaster?


I'm thinking the very definition of broadcaster is over the air...


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## Tom Robertson (Nov 15, 2005)

harsh said:


> A la carte doesn't require direct billing of the customer by the content provider. The MCVP can continue to aggregate the various selections just as they have at the bundle level since the beginning of subscription television. The big issue would be the invoice detail. Surely this would have to be done in the digital domain.
> 
> There would obviously be a substantially greater amount of transactions for both the provider and the MCVP but the cost of that is relatively low where Electronic Data Interchange is involved.


I didn't imply who was billing, just that the billing would occur. There would be many, many more transactions which include transaction costs. EDI is only a portion of the costs as there are still CSR time, websites to describe and handle each channel, backend systems to handle the transactions, etc.

Yes, all those systems and costs are there now. The point being is there would be more of them. And that the lowest cost per channel would not be the penny (or less) as it is today. It will be a dollar. Maybe 50¢. Whatever it is, the price will be orders of magnitude higher than a penny.

Peace,
Tom


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## joshjr (Aug 2, 2008)

Tom Robertson said:


> I'm thinking the very definition of broadcaster is over the air...


Reading back on it now, the articles I read were talking about the big 4 moving to cable channels. Guess that is exactly what broadcaster implies.


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## Shades228 (Mar 18, 2008)

If Ala Carte happened local stations would be done shortly after that. Most people would only get a couple of them depending on personal preference. The motherships would make more money offering a national feed then selling rights to shows to local stations that lost subscribers. However the weather channel, and channels like it, may actually go back to what people liked about it when it started. Most niche channels would be gone and syndication rights would change dramatically. Most things would go online faster because it would be cheaper overhead and more profit as each studio could just start it's own service and make more money. Instead of retrans agreements you will hear about bandwidth priority agreements, or some form of agreement for not having it count vs bandwidth caps aka "portal fees", and we'll have the same situation we have today. Pricing and cost will not go down overall because it will still have a cost to make the products that "people care about".


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## harsh (Jun 15, 2003)

joshjr said:


> Where is it stated that a local broadcaster must offer OTA to be considered a local broadcaster?


Is that not the definition of broadcast?

I volunteer for a cable access channel but we don't pretend we're anything more than "cablecast".


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## harsh (Jun 15, 2003)

Tom Robertson said:


> I didn't imply who was billing, just that the billing would occur. There would be many, many more transactions which include transaction costs. EDI is only a portion of the costs as there are still CSR time, websites to describe and handle each channel, backend systems to handle the transactions, etc.


I'm sure there would be programming change costs (and hefty customer fees associated with those changes) but all of the automated transactions probably don't amount to a hill of beans. The lion's share of the cost is in processing the payments and that wouldn't change one iota for DISH or DIRECTV.


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## lparsons21 (Mar 4, 2006)

Just considering the broadcast channels as Ala Carte. With CBS charging $6/month you could assume that ABC, NBC and FOX would also, so just for those 4 the cost would be $24/month. You have to wonder how much of the $6 is for the actual service provided and how much is in billing/supports costs.

I suppose I could break down the streaming services a bit to see what would be there if I cut the cord.
1. CBS = $6
2. Hulu+ = $8
3. Netflix = $8

That would get almost all of what a basic cable sub would or close to it for a total of $22/month, though a case could be made for Amazon Prime. But Amazon Prime is hard to put a cost on as it includes free shipping as well as the streaming access. If you assume 1/3rd of the cost is for the streaming add $3/month for it, bringing the total to $25/month.

Of course that doesn't get any sports or current series from the Premium channels, nor does it include what you might have to get to watch all that with. Tivo, Roku and others can get all of those as well as some smart TVs (or so I've been told).


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## Dude111 (Aug 6, 2010)

tsmacro said:


> One analyst thinks ESPN could cost $36 per month on its own


Yup.....If they can rip ya off,THEY WILL!!!!!!! (The more $$$$ the better in thier minds (Even if the quality isnt there))


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## SayWhat? (Jun 7, 2009)

How many first run episodes are there now in a series season? It used to be something like 26, but isn't it more like 13-15 now? Then repeated multiple times?

How many shows do you watch on any given network where you feel the need to see every episode every season? Generally, 2 or 3? 5?

How many networks have shows that you 'must' watch?

What does it cost you each year to see those shows including all the other networks you never watch at all? What might it cost you each year to see only those networks so that you could see those shows? Keep in mind that aside from DVR use, you can only see the shows when the networks decide to run them.

Now, what would it cost you to buy thiose shows on DVD so that you could watch them whenever YOU wanted to?

News and weather is free from many sources. Shopping options are plentiful. Most people can get decent OTA that includes much of the above and there are a number of options to record and play that content.


As has been said above, aren't the athletic supporters really the only ones who NEED live TV? And aren't the hardcore ones really the only ones who NEED national networks if they can't get enough on their local OTA stations? What will they end up paying when so many of the rest us truly 'cut the cord' and drop pay TV in all forms like I have? No subscription TV at all, satellite, cable or streaming. At least not pay streaming since there are a number of free streaming options. Even many new 'hot' shows are streamed for free on their network websites within a few days, often without being tied to a pay TV login ID.


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## slice1900 (Feb 14, 2013)

SayWhat? said:


> As has been said above, aren't the athletic supporters really the only ones who NEED live TV? And aren't the hardcore ones really the only ones who NEED national networks if they can't get enough on their local OTA stations? What will they end up paying when so many of the rest us truly 'cut the cord' and drop pay TV in all forms like I have? No subscription TV at all, satellite, cable or streaming. At least not pay streaming since there are a number of free streaming options. Even many new 'hot' shows are streamed for free on their network websites within a few days, often without being tied to a pay TV login ID.


You don't think in this brave new world where everyone who doesn't watch sports cuts the cord that new 'hot' shows will be streamed for free, do you? They have to pay the bills somehow, so if enough people cut the cord they'll have to charge you for them. Whether streaming or VOD. You'll either pay via streaming that forces you to watch the commercials, or VOD that you pay for up front (per viewing or on a subscription basis)

You may end up paying less not paying the sports tax, but if you think you're going to save beyond that, think again. You are thinking in terms "I won't be able to pay for all the crap I don't want, just what I do want" but the pricing for what you want will be significantly higher so you end up paying similar to what someone who hasn't cut the cord pays today. Otherwise there will be less revenue coming into the networks, which means less content will come out. If that means less Honey Boo Boo great, if it means less of what you consider good content, that's not so good.


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## Stewart Vernon (Jan 7, 2005)

Yep... and those cheap streaming options today will increase IF that becomes a major revenue source. Netflix and Hulu and whatever get stuff cheaper since it is second-run TV... the networks and studios made some money already through commercial and pay TV... IF you start taking that out of the equation, then Netflix is going to have to pay more to get the content... and they will have to raise their prices.

People seem to think they should get all this stuff for free, but yet if they were working in the industry they would surely expect to get paid for working... I can't understand why most of this is even a discussion really.

Either you watch a lot of TV, a little TV, or no TV. IF you watch a lot, there is no better bang-for-buck than satellite/cable TV. A buffet for a reasonable amount per day IF you watch a lot of TV. If you only watch a little? streaming might be good for you... as long as enough people continue to pay on the front end so that you get the back-end feed streaming for a reduced price.


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## AntAltMike (Nov 21, 2004)

Gloria_Chavez said:


> A sports distributor had to declare bankruptcy in Houston (for Astros baseball), and Time Warner may never see a return on the 2.1M per game it must pay the Dodgers.


I'm skeptical of what the Dodgers are doing, or trying to do. The last time I saw published RSN ratings, which I think were the RSN ratings just in their primary or home DMA, the Los Angeles Angels, who were in the thick of a pennant race, were getting about a 2% rating, whereas Detroit and St Louis were up around 8% and the Red Sox on NESN, which had had the highest ratings for years, were at about 5.4% even as they floundered near last place. Unfortunately, the Dodgers were not included in that 29 team survey because they had an unsettled cable TV availability situation at the time.

I think that the Dodger's announced contract is based on increased viewership, which they think they can develop by making themselves into the summer Lakers, but I don't think that it is possible to glitz their way to appreciably higher ratings for that product. I think that there are ratings-based backs and concessions in that contract that the public is not being told of.


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## inkahauts (Nov 13, 2006)

Gloria_Chavez said:


> What you're missing is that, per Charlie Ergen, only 20% of his subs watch ESPN. The other 80% pay the "sports tax" so that the ESPN fan doesn't have to pay the full 25 to 40 dollars that ESPN would otherwise cost.
> 
> One other issue that very few appreciate. The possibility that ESPN and Time Warner may have to write-off a significant portion of their contracts. A sports distributor had to declare bankruptcy in Houston (for Astros baseball), and Time Warner may never see a return on the 2.1M per game it must pay the Dodgers.


The problem with a la cert, is it does that to everyone. And many people who may not care about the core sports may sill watch the tennis channel or golf channel etc.. A la cart just raises prices for everyone on everything.


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## inkahauts (Nov 13, 2006)

AntAltMike said:


> I'm skeptical of what the Dodgers are doing, or trying to do. The last time I saw published RSN ratings, which I think were the RSN ratings just in their primary or home DMA, the Los Angeles Angels, who were in the thick of a pennant race, were getting about a 2% rating, whereas Detroit and St Louis were up around 8% and the Red Sox on NESN, which had had the highest ratings for years, were at about 5.4% even as they floundered near last place. Unfortunately, the Dodgers were not included in that 29 team survey because they had an unsettled cable TV availability situation at the time.
> 
> I think that the Dodger's announced contract is based on increased viewership, which they think they can develop by making themselves into the summer Lakers, but I don't think that it is possible to glitz their way to appreciably higher ratings for that product. I think that there are ratings-based backs and concessions in that contract that the public is not being told of.


Ever lived in LA? The dodgers where far bigger than the Lakers for a long long time. The lakers then became as popular as them overall, (I'm goign by media coverage and how many peopel i see with dodgers and lakers gear) and actually moved ahead of them only really during the McCourt years. The dodgers are incredible popular here in general. Especially with the Hispanic crowd, which makes me wonder how on earth they didn't go onto the Lakers channels and have a spanish channel too! The angels are a team that doesn't ever get the same kind of tv ratings, never has. I think more people down there like to either go to the game or catch it at a bar...


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## AntAltMike (Nov 21, 2004)

inkahauts said:


> Ever lived in LA? The dodgers where far bigger than the Lakers for a long long time.


Do you have any Dodgers Nielsen ratings data from 2013 and earlier? And how do they do outside of the LA DMA? The Red Sox and their NESN regional sports network have the exclusive to Providence, Springfield and Portland, where I expect their ratings to rival Boston DMA ratings, and I think they may share Hartford and New Haven with YES network.


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## inkahauts (Nov 13, 2006)

Im not talking just before then I'm talking historically. Like 70's through 90's. One of the big claims when they started this network is that it would help them regain the kind of popularity they had then now. I don't think they have ever had that kind of presence nationally on tv because they where on local over the air stations so much. 

Dodgers get a lot of radio listeners too. Thank Vin for that.


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## jimmie57 (Jun 26, 2010)

I saw this yesterday. Verizon Fios is moving to smaller al a carte type packaging.
http://www.technologytell.com/entertainment/60950/verizon-is-taking-fios-towards-a-la-carte/


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## James Long (Apr 17, 2003)

jimmie57 said:


> I saw this yesterday. Verizon Fios is moving to smaller al a carte type packaging.
> http://www.technologytell.com/entertainment/60950/verizon-is-taking-fios-towards-a-la-carte/


For $55 a month, customers can subscribe to the core package and two packs. Each additional pack will go for $10.

FiOS' president explained the decision:
"Customers want flexibility to turn channels on and turn channels off," said Tami Erwin, president of Verizon FiOS, which serves around 5 million video subscribers&#8230; While this is not all-the-way a la carte, customers have the ability to consolidate and collapse the kind of content they want to view," Ms. Erwin said. She said true a la carte pricing may be a more expensive model than what customers can get in traditional packages.
The new model will be available starting April 19.
$55 plus is not cheap, but $55 plus "pack B" without first needing to buy "pack A" could work out ... depending what channels are in each additional pack.

It is interesting that the author starts the linked article with "A la carte cable isn't dead. But Verizon may have just dealt it a crucial blow." It makes it sound like Verizon's new offering will kill a la carte, not make it stronger. In any case ... the core package price Verizon is offering is high.


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## dpeters11 (May 30, 2007)

Shocking I know, but Disney (specifically ESPN) doesn't like it.

http://blogs.wsj.com/cmo/2015/04/18/espn-says-verizons-new-tv-packages-violate-contracts/


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## James Long (Apr 17, 2003)

dpeters11 said:


> Shocking I know, but Disney (specifically ESPN) doesn't like it.
> 
> http://blogs.wsj.com/cmo/2015/04/18/espn-says-verizons-new-tv-packages-violate-contracts/


If I had signed a carriage contract with a distributor to sell my channels in tiers and the distributor broke the contract I would be upset.


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## dpeters11 (May 30, 2007)

Very true. Though Verizon says that it doesn't violate any agreements. Maybe the truth is somewhere in between.


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## James Long (Apr 17, 2003)

It usually is ... the gray area between Verizon's interpretation and ESPN's interpretation. Let's see how this works out in a court of law.


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## SomeRandomIdiot (Jan 7, 2009)

AntAltMike said:


> I'm skeptical of what the Dodgers are doing, or trying to do. The last time I saw published RSN ratings, which I think were the RSN ratings just in their primary or home DMA, the Los Angeles Angels, who were in the thick of a pennant race, were getting about a 2% rating, whereas Detroit and St Louis were up around 8% and the Red Sox on NESN, which had had the highest ratings for years, were at about 5.4% even as they floundered near last place. Unfortunately, the Dodgers were not included in that 29 team survey because they had an unsettled cable TV availability situation at the time.
> 
> I think that the Dodger's announced contract is based on increased viewership, which they think they can develop by making themselves into the summer Lakers, but I don't think that it is possible to glitz their way to appreciably higher ratings for that product. I think that there are ratings-based backs and concessions in that contract that the public is not being told of.


Of course they have a low rating. They are only available to roughly 28%-30% of the market. Do the math.

The Dodgers LA Sportsnet contract is a guarantee from TWC. There is nothing where the Dodgers get more or less, depending on ratings. That has long gone out of Sports Contracts with TV/RSNs.


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## SomeRandomIdiot (Jan 7, 2009)

lparsons21 said:


> Looking at some of the streaming options that are coming into play, I've come to a tentative conclusion or two.
> 
> 1. HBO Now coming in at $15/month pretty much sets the top bar for a premium channel. I would assume that IF Showtime/Cinemax/Starz decide to do the same thing, their prices would be something lower than that. It will be interesting to see in 6 months or so, just how well HBO Now does.
> 
> ...


One has to love when one makes assumptions based on partial facts.

HBO with 30M subs at `$7.50 each = $225M

ESPN with 100M subs at $6.50 each (for main ESPN Channel, not others) = $650M
Furthermore, ESPN's revenue from subs is roughly 60%. Advertising makes up another 30%
So the monthly revenue now for ESPN main channel is roughly $1B a month or over 4x what HBO is.

The programming cost for ESPN are MUCH greater.

Furthermore, better check what Sports Contracts ESPN has locked up and for how long. Most are not leaving ESPN in the next 5+ years, so despite what others might claim, the broadcasts will not be moving.

As thus comparing $15 for HBO as the top is ridiculous.

And ABC Disney is not declaring Chapter 11 anytime soon.


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## SomeRandomIdiot (Jan 7, 2009)

Tom Robertson said:


> No, he's setting the price based on "maintaining the current profit margin" and the number of viewers. We all know the market will set the final price.
> 
> My premise is the lowest cost channel today adds only a penny a month to your cable bill. In an ala carte system, that same channel will have to charge a minimum of $12/year just to cover the overhead of billing. Very quickly the overhead adds up, and everyone will find their overall bill will stay the same--with many fewer choices.
> 
> ...


Basic Programming costs are only 20%-25% of the package price, depending on the MVPD.

Billing isn't an issue. It can be done online - and with a service charge if done by telephone. Just like VOD which often has a surcharge.

To be generous, take 25% of the cost of your basic package - and that is what you have to fill in the blanks with a la carte.

Under a la carte, most people only receive 4-8 channels at the SAME price they pay now.

Anything over 8-10 channels will cost you more than you pay more.

Also, no one has mentioned that in the Verizon announcement is that the add on packages are for 30 days minimum. There is no I'll add this on Monday to watch MNF and take it off on Tuesday. Exactly what I posted several years ago, unlike partial credit for a month that one gets today.


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## lparsons21 (Mar 4, 2006)

SomeRandomIdiot said:


> One has to love when one makes assumptions based on partial facts.
> 
> HBO with 30M subs at `$7.50 each = $225M
> 
> ...


I won't try to do business math as your figures might be correct. But the average consumer doesn't look at what to subscribe to based on anything you have posted. HBO is considered the top Premier channel and what they do has an effect of what pricing the other premium channels do. That's been true for lots of years.

ESPN sets the bar for the semi-generalized sports channels in the consumer eyes. That's why some articles have claimed that if ESPN was ala carte, the cost would be $35+ per month. The reality is that if it were that high, it wouldn't be for long as getting enough subs wouldn't happen.


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## James Long (Apr 17, 2003)

lparsons21 said:


> ESPN sets the bar for the semi-generalized sports channels in the consumer eyes. That's why some articles have claimed that if ESPN was ala carte, the cost would be $35+ per month. The reality is that if it were that high, it wouldn't be for long as getting enough subs wouldn't happen.


ESPN would not survive on voluntary subscribers ... they need the 100+ million times whatever they charge distributors plus advertising sales based on having 100+ million subscribers to subscribe. Without the money, they cannot buy the top sports contracts that people expect to see on ESPN.

Their long term contracts to carry certain sports do not help ... those rights fees just serve as a debt that ESPN will have to pay regardless of how many subscribers they have in the future years.

Take all of the rights fees plus production costs plus promotional fees and one comes up with a hefty bill that needs to be paid. Take away subscribers and the advertisers pay less. Take away subscribers and ESPN loses that income. Without the ability to raise prices to the level of becoming profitable again ESPN ceases to exist.

Which is why ESPN fights a la carte as if the life of the network depended on it. It does.


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## Stewart Vernon (Jan 7, 2005)

Yep... and on the other end of the spectrum... those channels that are only charging 50 cents per subscriber and are in the same package as ESPN, so they get those same 100 million x 25 cents or so... How would those channels come anywhere near that if they were forced to be a la carte?

Answer... they wouldn't. So, there are a LOT of channels beyond ESPN that need to be in the tier model or they would not exist... which means all the griping IF it became a reality, people might love not paying for ESPN for about 5 minutes before they realize all the channels they wanted to watch just went POOF!

ESPN would have to evolve, and accept less revenue and have less subscribers under an a la carte model... but they have a MUCH better shot at surviving in that reality than do most of the other channels.


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## PCampbell (Nov 18, 2006)

It would be nice to see a provider set up shop Ala Carte then we would see for sure what happens. I do not think it will save any money. As for ESPN Disney dose not keep anything that will not make a good profit.


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## inkahauts (Nov 13, 2006)

It's already happening. CBS at 6 a month. HBO for the same as it is for cable subs. It's always going to be the same or far more depending on what channel. The premiums can go about the same price other will have to be higher.


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## James Long (Apr 17, 2003)

It is happening on a limited basis ... CBS streams live only in select markets so you are waiting until the next day to catch programming in most markets. HBO Now has it's own limits. If people are willing to live within the limits of the service streaming could be an option. Just don't talk to people with OTA or cable until after you have watched the show(s) online. Spoilers!

HBO is selling their product online the same way they have for years ... a la carte through a partner. I believe most providers will offer some limited form of their programming to streamers ... or offer bundles to companies like Sling TV. Not really much different that they are doing today except "delivery not included".


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## PCampbell (Nov 18, 2006)

Full scale la carte, a cable or sat company that is full la carte with no limits. That would work out great or crash and burn but either way we would know for sure.


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## Tom Robertson (Nov 15, 2005)

PCampbell said:


> Full scale la carte, a cable or sat company that is full la carte with no limits. That would work out great or crash and burn but either way we would know for sure.


So far, it has crashed and burned every time:

Big Ugly Dishes had it, model didn't work at all. (I hated trying to order all the channels I wanted, looking for vendors, deals, etc.)
Intel TV died unborn
Others?
So the risk of being the next to try it is pretty horrific. Unless you find a way to appease the channels and the customers, my prediction is it will fail every time.

There needs to be an enabling technology. Streaming might be it--where we buy content directly from the content creators, bypassing all the middlemen--even netflix. But someone has to fund the content creation. Will microloans and crowdsourcing replace media buys from the major networks?

Or will collections like netflix, hulu, and amazon replace networks? So we're still paying $50-$200 each month, but to libraries instead of cable companies and networks....

Peace,
Tom


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## SomeRandomIdiot (Jan 7, 2009)

lparsons21 said:


> I won't try to do business math as your figures might be correct. But the average consumer doesn't look at what to subscribe to based on anything you have posted. HBO is considered the top Premier channel and what they do has an effect of what pricing the other premium channels do. That's been true for lots of years.
> 
> ESPN sets the bar for the semi-generalized sports channels in the consumer eyes. That's why some articles have claimed that if ESPN was ala carte, the cost would be $35+ per month. The reality is that if it were that high, it wouldn't be for long as getting enough subs wouldn't happen.





Stewart Vernon said:


> Yep... and on the other end of the spectrum... those channels that are only charging 50 cents per subscriber and are in the same package as ESPN, so they get those same 100 million x 25 cents or so... How would those channels come anywhere near that if they were forced to be a la carte?
> 
> Answer... they wouldn't. So, there are a LOT of channels beyond ESPN that need to be in the tier model or they would not exist... which means all the griping IF it became a reality, people might love not paying for ESPN for about 5 minutes before they realize all the channels they wanted to watch just went POOF!
> 
> ESPN would have to evolve, and accept less revenue and have less subscribers under an a la carte model... but they have a MUCH better shot at surviving in that reality than do most of the other channels.





PCampbell said:


> It would be nice to see a provider set up shop Ala Carte then we would see for sure what happens. I do not think it will save any money. As for ESPN Disney dose not keep anything that will not make a good profit.





inkahauts said:


> It's already happening. CBS at 6 a month. HBO for the same as it is for cable subs. It's always going to be the same or far more depending on what channel. The premiums can go about the same price other will have to be higher.





PCampbell said:


> Full scale la carte, a cable or sat company that is full la carte with no limits. That would work out great or crash and burn but either way we would know for sure.





lparsons21 said:


> Just considering the broadcast channels as Ala Carte. With CBS charging $6/month you could assume that ABC, NBC and FOX would also, so just for those 4 the cost would be $24/month. You have to wonder how much of the $6 is for the actual service provided and how much is in billing/supports costs.
> 
> I suppose I could break down the streaming services a bit to see what would be there if I cut the cord.
> 1. CBS = $6
> ...


You all have a TOTAL misconception on how a la carte works.

You can subscribe to HBO Now at $15. You can subscribe to CBS for $6. You can subscribe to Netflix for $9. You can sub to Dish Sling for $20.

But if you do not pay for Internet or Data via LTE, you get nothing while you pay the fees above.

As stated too many times, basic TV channels account for 20%-25% of the Programming expense (and your bill) depending on the MVPD. Channels/programs that are ALREADY a la carte account for another 20% of the MVPD's expenses. Those include HBO, Showtime, Starz, NFL ST, MLB EI, NFL CI, Video on Demand Movies, PPV events etc.

Here is how a la carte would work.

If you have basic package, add in roughly $20 or so dollars for HD, Whole Home Server and DVR - depending on the MVPD. A extra receiver or so and your bill is at atleast $100.

Under a la carte, the MVPD would drop the basic programming charge or roughly $20-$25 bucks.

So your base bill is $75 to $80 with no channels.

Then you add in your channels a la carte. $36 minimum for ESPN....(you are already paying more)..$20 for 1 RSN......etc etc etc. Put in $10 for Disney. $10 for Bravo. etc etc etc.

Congrats. You have 4 channels and are paying more than you did for the package.

When you figure a la carte, quit thinking your entire bill.

The core charge will always be there.

Just like it is with your water bill. You pay extra for the actual units of water used.

Just like it is with your smartphone bill. You pay extra for data use.

Just like your car. You pay extra for Gasoline, oil etc.

Just like subbing to Netflix, Amazon, CBS, HBO and Dish Sling - unless you pay for the Internet, you will get nothing while paying a la carte.

Just as FiOS customers found out.....they really cannot save money under what was announced this past weekend.


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## SomeRandomIdiot (Jan 7, 2009)

James Long said:


> It is interesting that the author starts the linked article with "A la carte cable isn't dead. But Verizon may have just dealt it a crucial blow." It makes it sound like Verizon's new offering will kill a la carte, not make it stronger. In any case ... the core package price Verizon is offering is high.


The "core" package on any a la carte, even without programming, will be high - as stated above.

FiOS is just playing with words as a la carte is a buzz word now.

All FiOS is doing is putting in a "non-sports" basic package as most MVPD now have.

Their "Sports" add on package is just a new basic package + sports - or close to their current "essentials" package, which is why they think they can offer it under current agreements - while ESPN is saying they cannot.


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## SomeRandomIdiot (Jan 7, 2009)

James Long said:


> If the major sports channels lose viewers the content will go elsewhere. The price will then go down for the formerly major sports channel while we pay more for whatever channel the sports went to.


PPV per Sporting Event. It's coming.

NFL told you as much this year.


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## SomeRandomIdiot (Jan 7, 2009)

joshjr said:


> We have all been saying this for years. Nice to see someone put some numbers to it. My question would be how does anyone ever expect to see a new channel kicked off if we go a La Carte? I think we all know we pay for channels we don't watch and we all want out bill to be lower. I have zero doubts in my mind that if I paid for only the channels I do watch my bill would be just as high if not higher. In the end we all win with bundled packages. The other elephant in the room is that the Locals will know their viewership is way more than anyone else and think they deserve more than ESPN monthly. I can only imagine what would happen if the locals each set their price with us or our provider. 200% increase here and 300% there. How long before we are going with one local channel instead of them all. Its a mess for sure but better now then what it would be with a La Carte.


Local OTA Channels account for 35% of the viewing on any MVPD. It was even higher in the late 90s before all the RSNs.

That is why DBS did not take off until local channels were included.


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## SomeRandomIdiot (Jan 7, 2009)

lparsons21 said:


> Looking at some of the streaming options that are coming into play, I've come to a tentative conclusion or two.
> 
> 1. HBO Now coming in at $15/month pretty much sets the top bar for a premium channel. I would assume that IF Showtime/Cinemax/Starz decide to do the same thing, their prices would be something lower than that. It will be interesting to see in 6 months or so, just how well HBO Now does.
> 
> 2. ESPN would have to come in lower than HBO I think as few think 'premium' when they think of ESPN.


Your analogy is the equivalent of saying I pay $10 for a movie ticket so I should only pay $10 for a Sporting Event.


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## SomeRandomIdiot (Jan 7, 2009)

I have continued to tell you that the programming costs for MVPDs are not what people think over and over.....and people still do not get it.

Here are some facts everyone needs to digest....

*Floyd Mayweather and Manny Pacquiao are expected to split $300 million - here's where the money comes from*

http://www.businessinsider.com/mayweather-pacquiao-fight-purse-split-2015-4


*Pay-per-view* - Branch estimates pay-per-view sales will generate $270 million in revenue alone based on purchases in 3 million homes. However, some believe sales could reach 4 million homes, which would push this portion of the revenue up to $360 million. Of that, 55-65% will go to the fighters or ~$150-233 million with the rest going to cable companies and satellite providers (30-40%) and HBO/Showtime (7.5%).
MVPD are getting 30% - 40% of the price
HBO/Showtime getting 7.5% of the price
So who is really gouging you?


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## PCampbell (Nov 18, 2006)

SomeRandomIdiot said:


> You all have a TOTAL misconception on how a la carte works.
> 
> You can subscribe to HBO Now at $15. You can subscribe to CBS for $6. You can subscribe to Netflix for $9. You can sub to Dish Sling for $20.
> 
> ...


It would be nice to see a provider set up shop Ala Carte then we would see for sure what happens._* I do not think it will save any money*_. As for ESPN Disney dose not keep anything that will not make a good profit.


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## Stewart Vernon (Jan 7, 2005)

Not sure why my quotes were lumped into the "you don't know how a la carte works" megaquote... I think the person who quoted that jumble misunderstood what he was quoting from at least some of us.

I never got into who is making what money off of whom... I merely state what I always do that I don't see a world where a la carte ends up cheaper AND better for everyone.

People who barely watch TV might get TV cheaper if they can just pay for the one channel they want... virtually everyone else will pay the same or more for less choice than we have today with the bundles. Lots of channels would go away, other channels would change to survive... and most everyone would lose in some way once the dust settles.


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## James Long (Apr 17, 2003)

PCampbell said:


> It would be nice to see a provider set up shop Ala Carte then we would see for sure what happens._* I do not think it will save any money*_. As for ESPN Disney dose not keep anything that will not make a good profit.


I believe a person who set up such a service could end up a millionaire ... if they were a billionaire before they started the service.


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## Shades228 (Mar 18, 2008)

SomeRandomIdiot said:


> I have continued to tell you that the programming costs for MVPDs are not what people think over and over.....and people still do not get it.
> 
> Here are some facts everyone needs to digest....
> 
> ...


No one is gouging you except yourself if you order it.

If we went ala carte I also believe that ESPN would be one of the first to fold or at least go into bankruptcy protection unless they have paid upfront for their contracts. They just have too much money going out for too long. Either that or they would make a "bundle" themself. I could see like $15 for just ESPN, $20 for ESPN Suite, and $10 for EPSN 3/Watch ESPN or $25 for all.


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## lparsons21 (Mar 4, 2006)

SomeRandomIdiot said:


> Your analogy is the equivalent of saying I pay $10 for a movie ticket so I should only pay $10 for a Sporting Event.


Utter crap statement!


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## Tom Robertson (Nov 15, 2005)

PCampbell said:


> It would be nice to see a provider set up shop Ala Carte then we would see for sure what happens._* I do not think it will save any money*_. As for ESPN Disney dose not keep anything that will not make a good profit.


It has been done before, in big ugly dishes. And attempts to set a new system have crashed and burned before getting off the design board.

In C-Band consumers hated it and in the current market, networks hate it.

Peace,
Tom


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## phrelin (Jan 18, 2007)

Tom Robertson said:


> It has been done before, in big ugly dishes. And attempts to set a new system have crashed and burned before getting off the design board.
> 
> In C-Band consumers hated it and in the current market, networks hate it.
> 
> ...


I certainly didn't "hate it" when I had C-band.

In fact, what I most hated in the transition from most things being freely accessible to "how can we squeeze the American public today" was losing access to CBC.

Let's not kid ourselves. Disney/ESPN/ABC, CBS/Showtime, NBCU, and Newscorp/Fox are all doing quite well financially. They are not yet competing with each other.

If instead of mixed packages created by and from the cable/satellite companies we were offered programming packages from the companies that own the networks, that would be competition. But the manipulation of Congress, the FCC and foolish consumer minds left us without competition in the TV signal world.

In a few more years, the internet will have (already has?) changed all of that unless of course there will be effective manipulation of Congress, the FCC and foolish consumer minds.


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## KyL416 (Nov 11, 2005)

Tom Robertson said:



> It has been done before, in big ugly dishes. And attempts to set a new system have crashed and burned before getting off the design board.


And at least then you had the option to subscribe as long as the channel was available in the USA and used a compatible format like Videocipher or Digicipher, since in most cases they were the same feeds that cable and satellite providers use.

If it were to happen now you would be at the mercy of your local cable or satellite provider carrying the channels you want. If you're a fan of a popular and higher rated channel like Nickelodeon, Disney, USA, MTV, TNT, TBS, FX, AMC and TLC you're fine. If it's a niche channel like Ovation, TeenNick, Sprout, Reelz, VH1 Classic, Palladia, Boomerang, Fuse, TV One, BBC America or UP, you might not be so lucky if not enough people subscribe and your provider stops offering them, they drop the programming you like and try to appeal to a wider audience since they can no longer rely on their more popular sister channels for distribution, or they fold entirely.


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## PCampbell (Nov 18, 2006)

phrelin said:


> In a few more years, the internet will have (already has?) changed all of that unless of course there will be effective manipulation of Congress, the FCC and foolish consumer minds.


We went from cable to satellite now to the internet, I fail to see how the same product that cost the same to make will cost less if put on the internet. Would you sell your work for less just because it can be delivered a different way.


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## Gloria_Chavez (Aug 11, 2008)

PCampbell said:


> We went from cable to satellite now to the internet, I fail to see how the same product that cost the same to make will cost less if put on the internet. Would you sell your work for less just because it can be delivered a different way.


The median music performer earns less today than he/she did 14 years ago, even though his/her music is heard more than in 2000. The median reporter earns less today than he did one decade ago, even though his stories are accessible by more readers.

So it wouldn't shock me to see actors / professional baseball players earn less five years from today.

What has Charlie Ergen said about ESPN? That 80% of his subs who don't watch it subsidize that 20% that do.

What happens when ESPN is only offered a-la-carte? TV broadcast rights will decrease significantly.


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## KyL416 (Nov 11, 2005)

Or the rights for those sports will leave ESPN and go to channels that will be in more homes, jacking up the rates for those channels instead.

As we saw with Fox Sports 1, some of the contracts for the sports rights have distribution clauses. (i.e. the NASCAR contract led to Fox caving in and giving Fox Sports 1 to the remaining providers for the rate they were paying Speed)


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## Stewart Vernon (Jan 7, 2005)

Gloria_Chavez said:


> What has Charlie Ergen said about ESPN? That 80% of his subs who don't watch it subsidize that 20% that do.


And as I have said before... that is true of MANY channels. It's easy to single out a channel you don't like... but realize that many people don't like the channels you like either! In fact, given the population of the US compared to the TV ratings of every channel... it would seem that most people don't like most channels if you slice it that way.


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## PCampbell (Nov 18, 2006)

Gloria_Chavez said:


> The median music performer earns less today than he/she did 14 years ago, even though his/her music is heard more than in 2000. The median reporter earns less today than he did one decade ago, even though his stories are accessible by more readers.


 A Neil Diamond CD I am looking at Target is 10 dollars and 11.95 on iTunes download. Same CD. I don't see the savings. Also Disney NEVERS lowers there price. Can you tell me how we all can stream the Super bowl in HD at once? I hope you are correct and I an wrong and TV will cost way less over the internet and Disney and others will produce the same quality programing at a less profit I know I love taking a pay cut do you? Where I plan to retire we have the best dial up money can buy.


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## James Long (Apr 17, 2003)

KyL416 said:


> As we saw with Fox Sports 1, some of the contracts for the sports rights have distribution clauses. (i.e. the NASCAR contract led to Fox caving in and giving Fox Sports 1 to the remaining providers for the rate they were paying Speed)


"The original agreement between Fox and AT&T didn't include those top live events. Fox wanted more coin. AT&T balked.
"That means sports fans have been blacked out from watching MLS, NASCAR, and other sporting events on the network."
http://awfulannouncing.com/2015/att-u-verse-customers-are-still-missing-fox-sports-1s-big-events.html

It seems FS1 is happy to withhold some NASCAR (and other content) from AT&T until they get more money. Perhaps AT&T is small enough not to be as big of a problem as losing DirecTV or DISH.


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## KyL416 (Nov 11, 2005)

They would have lost Time Warner Cable too. I think articles said the threshold was 70 million subscribers, they're currently at about 90 million. U-Verse has about 6.1 million subscribers


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## phrelin (Jan 18, 2007)

The reality is the Millennials wlll be setting the market price.

We (and I do mean "we" as this includes me) who can't seem to watch TV unless the networks set a schedule will ultimately die off and it appears the Millennials want to watch on their own terms. Terms like "binge watching" have really become synonymous with "watching TV" for a lot of people. One analyst thinks Netflix will hit 150 million subscribers by 2020.

Content may or may not end up being cheaper, but it will become more à la carte. Sure you may subscribe to Netflix and Amazon and Hulu+ or some other combination. But you don't _have to_ subscribe to Hulu+ just because you subscribe to Netflix.

We who haven't cut the cord need to have a system where I can subscribe to packages named CBS/Showtime and NBCU, without Disney/ESPN/ABC or Newscorp/Fox. If I can't watch ABC without ESPN, that should be Disney's loss. The only reason it isn't that way right now is the combination of Congress, the FCC, and cable/satellite companies. It may be that a football player is worth $10 million a season or a movie star is worth $15 million a movie. But I shouldn't have to go to the movies or the stadium.


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## Stewart Vernon (Jan 7, 2005)

The only reason things are the way they are... is because of the consumers.

We aren't talking bread and water or even phone and electricity here... we're talking entertainment. There are lots of choices of entertainment from movies and music to video games and good old fashioned playing outside! TV is mostly a luxury. Some might argue news is necessary, but you can get your news other ways too.

The point is... people generally like the bundles. They like paying $50 for 200 channels (or whatever) even if they only watch 15 of those channels semi-regularly. When faced with the chance their channel might not exist otherwise OR paying virtually the same for 10 channels as for 200... most people will take the bundle. That's how we got here. I don't know why people forget that.

Netflix... $9.99 or whatever a month... you can binge watch... they have some original programming, but mostly retreads of stuff that already aired on cable/satellite and still airs on those today. If you want the Netflix original content, you have to pay for their service... just like any other channel or tier. What if you only want to watch "Orange is the New Black"? Even if you can watch it all in a month, you still have to pay Netflix for that month... so you're still on some level paying for content you never watch. Doesn't that bother you in the same way it bothers you on your cable bill? If not, why not?

Imagine a world where each Netflix, Hulu, Amazon Prime, etc has one show you want to watch... so you have to pay each of them $10 to get that favorite show... and each of them has a LOT of overlapping content that you're paying 3 or more times over not to watch! Do you still feel the same?

I'm not railing against any of these services, by the way, just pointing out they aren't an "escape" from "evil" cable/satellite. You also still have to have high-speed broadband Internet access to view those streaming channels and there's a cost associated with that no matter how you slice it.

I can't help but see people gleefully trading one thing they claim to hate for another thing only marginally different... and one day IF enough people switch, then that's where the power will be and you'll see those services start to squeeze the vise tighter and we'll have come full circle.


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## Eddie501 (Nov 29, 2007)

it's a heckuva lot easier to accept that there is a lot of stuff unwatched on Netflix for $9/mo vs $150 or cable/satellite. Plus it all comes through the same pipeline, it's all "Netflix". Whereas with cable, it's quite obvious when you scan through page after page of the guide & see all the junk you're paying for but not watching.

One thing you didn't mention though is that there is a lot of current programming that is not tied to a service. I can rent or buy new episodes of most basic cable programs through Vudu, Itunes, or Amazon. That's how a keep up with the handful of shows that I used to keep basic cable for. It's still cheaper than the forced bundles & I enjoy the shows much more without all the screen clutter & commericals from the cable versions.


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## grunes (Nov 13, 2013)

Something close to a la carte already exists - at Amazon, and others. You can pay per show.

It's shockingly expensive typically $0.99 / episode, sometimes more - because it can be. People will let themselves be gouged a little at a time. (Note: I've never watched through Amazon. Maybe some of the popular shows are available at no extra cost with Amazon Prime? I can't tell, because, as with Hulu+ and Netflix, they won't provide a comprehensive list of what they offer before you sign up.)

For example: Assume a family of 4. Assume each person watches 3 hours/day, at $0.99 / hour. That's about $360 / month. If someone stays home and watches all day, it blows up even faster.

Anyway there is a serious question, about how a family, or other group sharing a house, can figure out who should pay for what. The "right" answer, if it were cheap enough, would be to pay-per-play - but at current prices, it is simply too high.

And how do you limit how much the kids spend, without cutting them off altogether?

Another serious question is how a program provider (e.g., CBS, NBC, ABC, Fox, SyFy, HBO) can figure out how many subscribers the distributer (like cable and satellite companies, as well as Internet based distributers) actually sell their programs to. The potential explosion of Internet based distributers, all competing with each other, makes it very tempting for distributers to cheat.

Were it not for that, there needn't be a huge cost associated with billing separately for each channel. A distributer could simply have a check off form, from which the bill payer could specify what they want.

If we had stayed with the advertiser-paid ("free TV") model, it would have been a lot simpler, because the only question of cheating would be the need to monitor that various distributers are actually including the broadcaster's ads. But that's water over the bridge. It's hard to imagine someone like HBO, or the big sports networks, surviving on ad revenue alone.

I happen to live in an area where most of the big free TV networks (ABC, CBS, NBC, CW, Fox, MyTV...) are available OTA - even from an old omnidirectional attic antenna. The only other TV I watch often are SyFy and BBC America, which in my opinion have the best of "American" television . Once in a while I watch The History Channel, and its sister History International (I think of them both as the Historical Fiction Channels, for reasons I won't get into), and the Smithsonian and National Geographic Channel, but I figure OTA + Hulu ($8/month) + Netflix ($8/month), and fast enough Internet to support them, would be more than enough for me.

Alas, the other two people in my house watch a few other things - and one of them won't entertain the idea of change, so we pay Comcast $206/month for 3 DVRs with the minimum service they will rent DVRs with, + Internet - and that's despite frequent negotiation and threats to terminate. (We own our modem and router, so that's not part of the price.)

Besides, if everyone did just OTA + Internet, Comcast et al would raise the price of Internet and Hulu [owned by Comcast], and indirectly (by charging them more), Netflix.

Plus, content providers would probably distribute the popular programs so that there was only one good show per channel - which would effectively still force you to buy the junk with the good stuff. It's already happening to a large extent - most channels show old reruns, leased programming, and religious TV - all available very cheaply. Each network or channel already only shows a few popular shows. Not like when almost everything was on NBC, CBS and ABC.

I don't have any good answers to solve everything.


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## Stewart Vernon (Jan 7, 2005)

Eddie501 said:


> it's a heckuva lot easier to accept that there is a lot of stuff unwatched on Netflix for $9/mo vs $150 or cable/satellite.


True... but only as long as everything you want to watch is on Netflix and you don't want to watch anything not on that network. IF you want to watch something that Netflix doesn't have, then you have to subscribe or pay for that separately... and if that network is missing something, then you have to do it again.

IF you literally only want to watch a couple of shows, it's fine... but if you like a lot of shows, you're going to be paying through the nose to one-off everything!



Eddie501 said:


> One thing you didn't mention though is that there is a lot of current programming that is not tied to a service. I can rent or buy new episodes of most basic cable programs through Vudu, Itunes, or Amazon. That's how a keep up with the handful of shows that I used to keep basic cable for. It's still cheaper than the forced bundles & I enjoy the shows much more without all the screen clutter & commericals from the cable versions.


I did... I just didn't go into details. If you barely watch any TV, then you're way overpaying for cable/satellite... but if you watch just a few shows a week, it adds up quickly if you had to pay per show or per network to get access to those. For Amazon you either have to pay to get Prime and get some things "free" with that, or you have to pay per show. I don't know as much abotu how Hulu or Vudu works and how much is free vs how much you have to pay for. Some networks are now starting to have their own paid services (CBS and HBO for instance).

I watch a lot of TV... cable, even if it sometimes feels high-priced, is still the cheapest way for me to be able to watch all the TV that I want to watch.


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