# FCC to ok ala carte pricing?



## UTFAN (Nov 12, 2005)

Looks like the FCC took a big step closer to ala carte pricing today.

For the life of me, I just don't see how it will work.

Flame away folks, flame away.:nono2:


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## Geronimo (Mar 23, 2002)

I saw a public statement by Kevin martin but I saw no official FCC action. Did I miss something?


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## James Long (Apr 17, 2003)

Link UTFAN?

IIRC: The FCC allows ala carte pricing now. It's the "requires" that annoys E* and D*. 

JL


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## FTA Michael (Jul 21, 2002)

I don't think E* and D* are annoyed by a la carte pricing. I think that the five or six major content providers are scared silly about it.

Imagine if Nicktoons hadn't been tied to CBS O&O retransmission agreements because E* couldn't force it on viewers at a particular tier. Imagine if folks could choose to save money by dropping ESPN Classic, Lifetime Movie Network or some other channel that lots of people don't like.

I think the providers may lose a dollar or two per sub, but the content providers might see significant loss of viewers on some channels. I'll bet they hate it when that happens.


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## Geronimo (Mar 23, 2002)

As I said back in post 2 the FCC chair made some statements today---but I have heard nothing of an FCC action or even a scheduled vote. There are lots of links to the chairman's remarks. hers is one

http://www.thewbalchannel.com/consumeralert/5424611/detail.html


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## UTFAN (Nov 12, 2005)

Here's a link to just one story. Not a rule or decision by any means, but a clear signal.
http://www.cbsnews.com/stories/2005/11/29/business/main1081239.shtml


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## ebaltz (Nov 23, 2004)

This would be excellent. When the loser channels go away it would free up bandwidth for more HD.


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## Geronimo (Mar 23, 2002)

UTFAN said:


> Here's a link to just one story. Not a rule or decision by any means, but a clear signal.
> http://www.cbsnews.com/stories/2005/11/29/business/main1081239.shtml


While that is froma different news source than the link I showed it deals with the same event---remarks by the chairman beforea senate committe. Butt he FCC has not taken any action to date.


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## Paul Secic (Dec 16, 2003)

ebaltz said:


> This would be excellent. When the loser channels go away it would free up bandwidth for more HD.


I doubt it will ever happen, but I'm defintlly in favor of it, because I watch about 20 channels out of 120.


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## Mike D-CO5 (Mar 12, 2003)

My guess would be if they did allow Ala carte on the satellite channels , both Dish and Directv would price them so high that it would cost you more to sub to just the 20 channels you wanted. Most people would see this, and go with the programming packs, as they would feel they were getting their money's worth. Wouldn't you take the programming pack vs paying more for less channels? 

I think that both companies would also make you pay for your own receivers if you wanted ala carte. As well as making you pay more for the warranty and requiring you to take it, if you went with ala carte. In fact I can see Dish doing just that. Making you pay all kinds of extra fees that would equal to what you were paying for the programming packs. Making it a wash in choice. Kind of like they are doing with the dvr fees. If you sub to Aep you don't pay any dvr fee on Any of your receivers. IF you don't, they hit you with 4.99 per receiver. Kind of like extortion.


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## olgeezer (Dec 5, 2003)

Mike D-CO5 said:


> My guess would be if they did allow Ala carte on the satellite channels , both Dish and Directv would price them so high that it would cost you more to sub to just the 20 channels you wanted. Most people would see this, and go with the programming packs, as they would feel they were getting their money's worth. Wouldn't you take the programming pack vs paying more for less channels?
> 
> I think that both companies would also make you pay for your own receivers if you wanted ala carte. As well as making you pay more for the warranty and requiring you to take it, if you went with ala carte. In fact I can see Dish doing just that. Making you pay all kinds of extra fees that would equal to what you were paying for the programming packs. Making it a wash in choice. Kind of like they are doing with the dvr fees. If you sub to Aep you don't pay any dvr fee on Any of your receivers. IF you don't, they hit you with 4.99 per receiver. Kind of like extortion.


Actually Dish did ala carte first at $1 the at $1.50. Because of content providers bundling packages and some channels exclusion because of price (ESPN) there weren't enough choices to make it a workable program and it was finally dropped.


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## Stewart Vernon (Jan 7, 2005)

Just to finally quiet all the talk of how a la carte would work better... I wish the major companies would institute a plan for it and let it die the logical slow death that it would die once made available to everyone.

The FCC isn't allowing or disallowing it! Though I suppose they could pass something that would "force" it on providers.

Be careful what you wish for applies here.


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## Chris Blount (Jun 22, 2001)

From http://www.skyreport.com (Used with permission)

A la Carte on the Way? Street Says Maybe Not

Also coming out of Tuesday's Senate hearings ... Federal Communications Commission Chairman Kevin Martin said he believes a la carte offerings from pay-TV would not increase the cost of programming to consumers, and programming choice should be one of several options that ought to be considered for the multichannel business. 
Wall Street took notice of Martin's a la carte stand.

Tom Eagan of Oppenheimer and Co. said he does not expect an FCC decision on programming choice will force a change in the cable industry's approach to pricing. However, "it does support consumer groups and members of Congress who are eager to demand a change," the analyst said.

Doug Shapiro of Banc of America Securities said mandating a la carte "would be a tremendously complex, controversial and likely a litigious process with unclear consumer benefits and numerous potential unintended consequences."

Blair Levin of Legg Mason said while Martin's testimony will gain attention, "we don't believe it will significantly increase the risk that the government will require cable operators to offer a la carte programming. We don't think the FCC has the authority to do so and we don't think Congress will end up doing so for (for several reasons)."


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## UTFAN (Nov 12, 2005)

I just don't see it working. Take just the DISH customer base for example. Essentially you'd have over 11-million different programming packages.

Call centers are likely already over-whelmed by folks who can't figure out three!

Key probem is too many channels are controlled by too few companies.

Dish, Direct, Comcast etc, will still be forced to carry and pay for channels, even though customers will say they don't want them. 

Lots of folks will order ESPN or HBO. And if satellite and cable companies want to be able to provide them to their customers, those companies will make them either pay through the nose, or still carry the niche channels, even though only a few folks want them.

There is plenty of competition and choice. The FCC, like the NAB, just doesn't get it and both are dumber than New York Democrats and/or chickens.


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## HarbingerGA (Sep 29, 2005)

I imagine a price structure looking something like this:

Each of the first ten channels selected cost $3/mo each (or some other relatively expensive amount) regardless. Additional channels are charged at a rate relative to the level of interest - if you hadn't already selected TNT in your first ten, it might cost you $1.25/mo while adding DiscoveryTimes costs 25¢/mo and Fox Reality costs 2¢/mo.

Thus the satellite companies still get a strong cash flow for a few channels selected while allowing people to load up on the niche channels cheaply.

Maybe this is economically illogical but it makes sense to me.


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## kenglish (Oct 2, 2004)

I read some time ago, that ESPN was asking about $6+ per subscriber. So, you might as well just pay each network individually....a little bit like the old c-band days.


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## BobMurdoch (Apr 24, 2002)

It won't work. In the "good old days" they seem to want to return, Sports Channel NY cost $10 a month in the 90s if you wanted to watch Mets games as an a la carte channel (since only 10% of the available viewers signed up, they had to soak those subscribers who would pay just about anything to get it). When they gave it to everyone the price dropped 90%.

This scheme will ONLY save money for those that watch maybe 10-15 channels regularly. I never watch Soapnet, but I understand that others like it (and I want my G4 which I'm sure would go away if other folks who could care less about THAT channel weren't paying for it)


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## KyL416 (Nov 11, 2005)

Heh, don't forget about the cable end of it. What most cable subscribers that support this fail to realize is that everyone would need a cable box for every TV that wants cable since they would need to scramble every channel for this to work. It would pretty much render "Cable Ready" TVs and VCRs obsolete.


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## Hound (Mar 20, 2005)

A la carte pricing would eliminate OLN and Comcast Sportsnet requirements that
a multichannel broadcaster provide these channels to a certain percentage of subscribers. It would substantially change the way Comcast or other vertically integrated companies purchase programming from professional sports leagues or teams. For example, Comcast can purchase ice hockey from the NHL or baseball from the Philadelphia Phillies and Comcast, as the largest multichannel video provider, knows that it can make a profit from its own subscribers by adjusting the packages that is offered to its own subscribers. Comcast then goes out and requires other multichannel providers to provide OLN to 40 percent of subscribers and Sportsnet Philadelphia to 90 percent of subscribers. How many subscribers do you think Comcast would get if it had to price and provide OLN and Sportsnet Philadelphia a la carte to not only its own subscribers, but all subscribers of competing multichannel video providers? A la carte pricing would also allow subscribers whose multichannel video provider does not pick up OLN, Sportsnet, Yes, etc., to get those channels a la carte. The true fans would subscribe and not be blacked out by Comcast business strategies that are an attempt to maximize its own profit. 

There would still be package deals like basic, expanded basic, AT60, AT120, etc. But package deals would be without sports programming. A la carte pricing would significantly change the pricing of sports programming and make it available to subscribers of all multichannel video providers. A la carte pricing would significantly change the revenues that sports teams get for programming and affect player salaries. The real sports fans (like myself) would end up paying more. However,
I think this is a good thing. The marketplace would eventually adjust to how
much the sports programming is really worth. Right now every subscriber is
contributing to the very high salaries and profits of professional players and teams.


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## Mike D-CO5 (Mar 12, 2003)

Well said, I agree totally with the sports being bought ala carte and taken out of the basic programming packs. That alone should lower your bill by $20.00 a month. Channels like Espn drive the price up for everyone yearly now with their price increases. Dish has had an increase every year since 2000. That is 5 years in a row and I am sure in Feb or March we can expect another increase as well. 

Imagine if the porn channels were included in the programming packs and we the subscribers were forced to subsidize these channels like we are the sports channels now. I don't think it is right to make everyone pay for porn channels that not every one watches and I definately don't think it is right to make everyone pay for the sports channels that not everyone watches.


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## chewey (Jul 28, 2004)

Mike D-CO5 said:


> Well said, I agree totally with the sports being bought ala carte and taken out of the basic programming packs. That alone should lower your bill by $20.00 a month. Channels like Espn drive the price up for everyone yearly now with their price increases. Dish has had an increase every year since 2000. That is 5 years in a row and I am sure in Feb or March we can expect another increase as well.
> 
> Imagine if the porn channels were included in the programming packs and we the subscribers were forced to subsidize these channels like we are the sports channels now. I don't think it is right to make everyone pay for porn channels that not every one watches and I definately don't think it is right to make everyone pay for the sports channels that not everyone watches.


Not everyone watches CNN or Fox News, or what about the kids and cartoon channels. Why just single out sports? I think everyone could argue that they could get a cheaper basic package as long as you eliminated the specific types of channels they don't watch. Maybe instead of individual ala carte, they could offer groups of channels like family, kids, religious, superstations (USA, TNT, TBS), sports, educational, etc.


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## lifterguy (Dec 22, 2003)

chewey said:


> Not everyone watches CNN or Fox News, or what about the kids and cartoon channels. Why just single out sports? I think everyone could argue that they could get a cheaper basic package as long as you eliminated the specific types of channels they don't watch. Maybe instead of individual ala carte, they could offer groups of channels like family, kids, religious, superstations (USA, TNT, TBS), sports, educational, etc.


Sports channels get singled out, because they are far and away the most expensive channels that cable and satellite providers deliver. (And they are the most expensive because of the ever increasing prices they are willing to pay to team owners.) But I think putting new requirements on cable and satellite providers is the wrong way to go at this time. Instead, Congress and the FCC should make the following changes:
1) Eliminate or put severe restrictions on vertical integration. Cable and satellite should not be allowed to own the channels they carry. If they are allowed to own those channels, they should be required to operate as completely separate units.
2) Prohibit channel owners from "bundling" their various channels or exerting any influence over how much the distributor (cable or satellite) charges for any individual channel or what tier of channels it appears in.

These two changes would create new pressures for channel owners to lower the amount they charge distributors for each of the channels they provide. And it would create new opportunities for the cable and satellite operators to create new tiers of channels that reflect the actual cost of providing those channels. The lowest price tiers would be reconfigured to include only channels that cost little or nothing for the cable or satellite company to carry. They could also create a tier of sports channels that would reflect the actual cost of providing those channels. Right now the biggest obstacle to doing this is not technological - it's the contracts demanded by multi-channel owners (Fox, Disney-ABC, etc.) who use an "all or nothing" approach to blackmail cable and satellite companies into paying higher prices for popular channels and favorable channel positions for unpopular offerings. :soapbox:


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## Hound (Mar 20, 2005)

Sports are not being singled out. It was only an example. All channels will be a la
carte. But there will also be packages that include and exclude news channels,
sports, religious, shopping, movies, and many other channels, etc. Packages will be optional. Many subscribers will still opt for a package and then pick up sports,
news, movies, HBO, Disney, etc. a la carte.

As to the Mets and the old sports channel NY example. I believe the individual price of some sports channels will exceed $10 a month under a la carte. Could be $20 or $30 a month or more. The free market that a la carte brings, will eventually determine pricing. Yes, sports channels a la carte will be expensive but if they are too expensive, subscriptions will fall. The real sports fans will be paying for the programming. These channels will no longer be subsidized by all subscribers.


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## FTA Michael (Jul 21, 2002)

UTFAN said:


> I just don't see it working. Take just the DISH customer base for example. Essentially you'd have over 11-million different programming packages.
> 
> Call centers are likely already over-whelmed by folks who can't figure out three!
> 
> Key probem is too many channels are controlled by too few companies.


I agree that the concentration of channel ownership is a huge part of the problem. But there's no nice way to change that.

Dish already has, in effect, 11 million different programming packages. One guy gets one set of locals, AT120 and WPIX. Another gets a different set of locals, AT60+, and Playboy. I've got the grandfathered locals/supers package, AT180, the Sports Pack, and the HBO/Cinemax value pack. I haven't even started with the permutations available with international channels. And thanks to computers and databases, Dish already keeps track of exactly what each customer has purchased.

Finally, I keep thinking about Canada's DBS providers. They both provide themed packages and lots of a la carte choices. Despite a much smaller potential audience than the US, Canadian providers manage to offer about as many diverse channels, and at very reasonable subscriber rates. Is there some particular reason why, say, the Bell ExpressVu pricing model wouldn't work here?


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## UTFAN (Nov 12, 2005)

Your point is well taken carload, I'll counter by revising my remarks to make the total number 11 million X 11 million programming packages!:hurah: 

And I cannot accept anything Canada does as a model for success, sorry.


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## kc1ih (May 22, 2004)

UTFAN said:


> And I cannot accept anything Canada does as a model for success, sorry.


Canada (the country) has not done anything. We are talking about capitalistic corporate companies, owned by stockholders, just like the companies in the US. If Canadian capitalists can be successful operating this way, there's no reason US capitalists can't do the same.


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## Stewart Vernon (Jan 7, 2005)

Everyone (except one poster who said this already) conveniently forgets that Dish/DirecTV/cable also has other bills to pay besides the fees to each channel... so I'd be very surprised to see you be able to pick "any" channel for $3 apiece in quantities of say 10... because a $30 bill to Dish wouldn't pay all their other fees, employees, etc.

I suspect what we would see are all channels being more like how HBO and SHO are marketed right now. $10-$15 per "channel" though with HBO you get several HBOs... but with other channels you might only get 1 channel for $10 if that's all the company makes.

Channels with fewer viewers would either cost more or go away entirely. Channels with more viewers *could* go down in price, but if they know you will pay that much a la carte then why would they? In fact, we could see NO bundling for savings by the most popular channels with a la carte, because if they know you would pay $10 for it, why would they agree to discount it as part of a package for you?

Choice in channels to watch would take a nosedive as only the most popular channels would survive... so that channel you like (say Sci-Fi) but only like it 2 days a week, would probably not survive... and in the end we all would pay the same or more than we do now to have less channels.

And then we'll all be sitting here wondering why the great-much-better-a-la-carte didn't work magickally as we thought.

So I hope it never comes to pass.


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## harsh (Jun 15, 2003)

KyL416 said:


> Heh, don't forget about the cable end of it. What most cable subscribers that support this fail to realize is that everyone would need a cable box for every TV that wants cable since they would need to scramble every channel for this to work. It would pretty much render "Cable Ready" TVs and VCRs obsolete.


"Cable Ready" TVs and VCRs are going to be obsolete anyway due to the mandatory transitition to DTV. Within four years (+/- a few months), the devices that claim "Cable Ready" will be downstream from at least an external DTV tuner so the built-in tuner will be stuck on channel 4 or unused. VCRs/DVRs without STB control will be effectively useless for multi-program recording at that point.

The manufacturers need to insure that DTV tuners will respond to popular cable box IR codes.


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## Geronimo (Mar 23, 2002)

The mandatory transition to DTV is for OTA. Cable companies may very well continue in analog mode for some time at least for their low end packages. I also think that you will start seeing digital tuners in other devices as well. In fact I believe it is required,


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## Mike D-CO5 (Mar 12, 2003)

chewey said:


> Not everyone watches CNN or Fox News, or what about the kids and cartoon channels. Why just single out sports? I think everyone could argue that they could get a cheaper basic package as long as you eliminated the specific types of channels they don't watch. Maybe instead of individual ala carte, they could offer groups of channels like family, kids, religious, superstations (USA, TNT, TBS), sports, educational, etc.


 I actually posted that very thought on the Dbsforums website this morning. That you could have groups of channels like News, Sports, Family, Children's, Womens, Music, Variety, Movie , Locals, etc. That way you could add the blocks of programming you want and you would get a discount for each block you add. In other words if you add more you save more ending up with paying the price of say Aep if you add all the programming. IN fact they could offer both options; both ala carte and regular Top 60, 120,180 Aep . This is doable by both sat services if they wanted to. I for one would love to save money since I don't watch sports.

They could also offer the sports as a pay per view price like they do porn channels. You can sub to say the porn channel for 22.99 a month or pay for one movie for like 9.99 -13.99 per event. They could do the same for sporting events. Then you could pay just for what you want to watch in sports or you could sub to the sports pack.

And for those who hate Women's channels like Lifetime and We etc, you wouldn't have to sub to the Women's pack. The same for those who don't have kids - no children's programming.

I think it would increase the amount of subs to Dish is they allowed ala carte blocks of programming. More people would sub to satellite if they could just buy what they want to buy and not subsidize other people's viewing interests.

OF course the public service channels and the shopping channels would come standard no matter what you sub to. By law the sat companies have to offer public service channels and the shopping channels pay Dish to be on the satellite.


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## Jeff McClellan (Apr 22, 2002)

It just wont happen. Charlie has always stated he would like to have small packages. He stated this years ago on a chat. He has tried to do this within what the market would allow. At one time, they did have ala-carte. He still has a few small packages that are a great deal but, as long as programmers want their crap tied to the most watched, it wont happen.


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## Stewart Vernon (Jan 7, 2005)

It happens in all forms of sales too... either some kind of bundling with other products OR making sizes available that may or may not be to your desires.

I don't want a $1 small fry from McDonalds... I only want about 5 actual fries with my meal... why can't I pay less (per fry) and buy only what I want?

I don't want an AM/FM tuner, since I only listen to FM radio... Why do I have to pay for an AM tuner that I don't use?

My car has a cigarette lighter... I don't smoke. Why is it there? I don't want it... and I want to pay less not to have it!

There are more, and perhaps better examples... but the point is, sometimes things are the way they are for a reason... and it is actually a savings to be bundled even if you don't want the whole thing.

Like how a value meal is sometimes cheaper than the individual items, even if you can't eat the whole meal... or when they have 2 for $2.00 deals, and the individual item would have cost you $2.25... so it is cheaper to buy 2 even if you can't eat the whole second burger.


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## Mike D-CO5 (Mar 12, 2003)

Jeff McClellan said:


> It just wont happen. Charlie has always stated he would like to have small packages. He stated this years ago on a chat. He has tried to do this within what the market would allow. At one time, they did have ala-carte. He still has a few small packages that are a great deal but, as long as programmers want their crap tied to the most watched, it wont happen.


 Maybe if the government legislates the changes, so that the broadcast providers can't tie channels together in groups for carriage. Then you wouldn't be forced to pick up say Nick Toons if you want the Cbs local stations. This would be very beneficial to everyone , especially in regards to the sports channels. It would make their revenue drop but only the die hard sports fans would pay for the sports they really want.

If this one law was created then it would go a long way in making Ala carte a reality. If the Fcc really wants this they can make it happen. I don't know about you, but I am more than tired of the yearly price increases with satellite and cable. If we could sub just to what we really like instead of the way it is now , I think it would really go a long way to helping us with price control for the consumer. I am sure ala carte won't be perfect but it would be a good start in helping the common man sub to what he wants,not what the company wants you to.

I think it will happen eventually.


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## Jeff McClellan (Apr 22, 2002)

I agree but keep in mind, Charlie was the innovator of this, until he hand was forced. He did really try and I commend him for it.


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## FTA Michael (Jul 21, 2002)

HDMe said:


> Everyone (except one poster who said this already) conveniently forgets that Dish/DirecTV/cable also has other bills to pay besides the fees to each channel... so I'd be very surprised to see you be able to pick "any" channel for $3 apiece in quantities of say 10... because a $30 bill to Dish wouldn't pay all their other fees, employees, etc.


Uh, Dish already offers AT60 for $27. You can "a la carte" just the superstations for $11.

Besides, what's the incremental cost to Dish of adding another subscriber?


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## Geronimo (Mar 23, 2002)

carload said:


> Uh, Dish already offers AT60 for $27. You can "a la carte" just the superstations for $11.
> 
> Besides, what's the incremental cost to Dish of adding another subscriber?


Since they pay many of the content providers on a per sub basis that depends on what that particualr sub orders.


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## FTA Michael (Jul 21, 2002)

Geronimo, of course there are per-sub programming fees, but HDMe's valid point is that there are large fixed costs that need to be covered regardless of the number of subs. I flipped that argument on its head -- considering that the infrastructure is in place, incremental costs per new sub are relatively low.

Dish's non-package access fee (for a la carte only, such as HBO or the supers) is $5 plus the cost of the a la carte option. Considering that Dish has little reason to give such barely-subs a price break, it suggests that the incremental cost is less than $5/month/new sub.


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## Stewart Vernon (Jan 7, 2005)

carload said:


> Uh, Dish already offers AT60 for $27. You can "a la carte" just the superstations for $11.
> 
> Besides, what's the incremental cost to Dish of adding another subscriber?


Don't forget to take into account that the current package price structure (non a la carte) helps Dish be able to have some of those other pseudo a la carte options available.

If everything went a la carte, there would have to be changes in order for them to remain profitable... otherwise they would have to contend with the possibility of having 11 million subscribers, of which perhaps 5 million only wanted to pay for 5 channels.


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## Stewart Vernon (Jan 7, 2005)

Mike D-CO5 said:


> I don't know about you, but I am more than tired of the yearly price increases with satellite and cable. If we could sub just to what we really like instead of the way it is now , I think it would really go a long way to helping us with price control for the consumer.


What makes you think that you wouldn't see yearly price increases with a la carte?

If channel A is losing money at $1 because not enough people subscribe, that channel will go up to $1.50 or more ASAP...

If channel B is raking in subscribers hand over fist at $2.00 per, then why not try raising to $2.50 and see how many will still pay? After all, many folks have said they would gladly pay $5-$10 per channel just to get the 5 channels they like and not feed the "evil" sports channels...

Yearly price increases have nothing to do with lack of a la carte and everything to do with companies wanting to increase profit and/or become profitable in the first place.


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## Stewart Vernon (Jan 7, 2005)

carload said:


> Geronimo, of course there are per-sub programming fees, but HDMe's valid point is that there are large fixed costs that need to be covered regardless of the number of subs. I flipped that argument on its head -- considering that the infrastructure is in place, incremental costs per new sub are relatively low.


What does that mean exactly... that the "infrastructure" is already in place?

The satellites are up there, but are so expensive that I doubt they are paid for yet... and about the time they pay for one launch, there is an older one that is needing to be replaced OR need to launch another for more new channels.

Also, the employees at Dish may already be hired (the infrastructure is already there) but those people get paid every week... and want raises too, just like you or I would if we worked there... and if they get a raise, then our bills go up at some point!

There are costs for existing subscribers as well as costs to obtain new subscribers... and these costs go up all the time even without new channels or channels asking for more money for carriage.


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## diospyros (Nov 14, 2005)

Years ago I worked for a multi-media company and had access to what they paid for programming content. I don't remember any figures and probably wouldn't quote them if I did (even though I could be referred to as a disgruntled former employee). Just keep in mind a couple of facts. Content is usually sold per subscriber. Also, usually that cost per subscriber is offered on a volume basis.
A small cable system of 10,000 sunscribers pays one heck of a lot more for it's programming than D* or E*. When you have millions of subscribers much of the content becomes very inexpensive, but make that a la carte and costs for any given channel will have to increase as there would be fewer viewers. When everything is said and done, A la carte would not provide as much savings as it seems it should. And it will make things much more difficult for the cable and dbs companies: increase their operating complexity and costs and decrease their level of customer service (which is already pretty poor in some cases).

Personally, I live alone and would probably save a little bit of money, but for a family which might require 50-60 channels to satisfy everyone, a la carte would make things much much more expensive. Messing with *family* finances is poor politics and bad business behavior. Plus, I find that when something changes that saves me money (like taxes or prices or whatever) it doesn't seem as satisfying when the same change ends up costing my poorer or retired relatives more. 

Don't expect a la carte to happen. And don't expect to be happy if it does.


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## Mike D-CO5 (Mar 12, 2003)

It works in Canada and the price isn't that much more than down here in the U. S. . It is all about changing things so that it can become a reality. 

The laws would have to be changed in regards to forced carriage of looser channels. In other words, make it illegal so that content providers like Disney, Viacom etc , could no longer tie together channels for carriage so they can get a contract with say Dish or Directv. That one thing would help with the ala carte idea. That is what makes the price of everything go up. When Viacom wanted to allow carriage of Cbs in Cbs owned dmas they made Dish carry Nick toons too. This made Dish pull the Cbs stations for like 3 days till they worked out a solution and Dish was forced to carry Nick toons. Then Dish went up the next year on their price because of it. 

If you made this illegal , these kind of things wouldn't happen anymore and the channel would stand on it's own in regards to price. It all depends on the Fcc and if they want to really go with Ala carte options. And whether the congress would make a law dealing with what I have already described. 
My guess is that the content providers will Pay the congress big in order to stop this from happening.


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## derwin0 (Jan 31, 2005)

I wouldn't really call Canada's DBS ala carte.
Bell Expressvu requires the $27.00/month Digital Basic to begin with (close to what Dish's AT60 is priced at).
You then add themes (blocks of channels) at $8.00/month ($5.00 if 5 or more).
There are alacarte channels available (Bell calls them pick n pay), but not all channels are available this way, in fact it's far less than half.


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## Snoman (Apr 24, 2005)

kc1ih said:


> If Canadian capitalists can be successful operating this way, there's no reason US capitalists can't do the same.


Bell Expressvu has never made a profit. Their accumulated losses are now greater than $1.5B us.

OTOH, Star Choice has made a small profit for the last couple of years, but only becuse they sell their signals to cable head ends and other satellite companies.


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## Jeff McClellan (Apr 22, 2002)

So lets see. Ala carte comes in, bundling goes away under new laws. Programmers lose money based on their fluff channels not being bought. Programmers then raise the rates on the significant viwed channels. One year later, we pay more for less. Its the American way.

We also must accept some responsibility for this to. Oh Charlie, please add National Geographic, and also add the Discovery Themes. And how many more did we beg him to add in the last 4 years. Well he heard you and got them, but, there was one little catch. In order to satisfy his customers, he was held hostage by the (SUPPLIERS.) The only way to make this work is to complain to the suppliers, let them know you would boycott their stations and/or products. Only then I think, will you start to see smaller packages bundled towars your taste. Sports, family, oh and yes, violence. But, it will never be cheaper. Rant mode off.


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## jrb531 (May 29, 2004)

UTFAN said:


> I just don't see it working. Take just the DISH customer base for example. Essentially you'd have over 11-million different programming packages.
> 
> Call centers are likely already over-whelmed by folks who can't figure out three!
> 
> ...


So you say.

So of us want choice and if I only want select channels then let me subscribe to only what we want and let the market decide the cost.

At the very least the FCC should break up the "forced" packages and let the distributors package channels as they see fit.

To this day not a single person has been able to tell me why we only have 3 packages and not more that maybe are themed to certain types of programming.

So please do not proclaim that "everyone" hates ala cart or changes because just as the statement "everyone wants ala-cart" would be wrong.

You have an opinion as do I and everyone else and right now the way I see it you have a choice and can keep your packages but I am forced to pay for channels I do not want.

You say keep everything as it is because it suits you and I say let us have some say in what we pay for.

Who is right? Why not offer both?

-JB


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## Greg Bimson (May 5, 2003)

jrb531 said:


> At the very least the FCC should break up the "forced" packages and let the distributors package channels as they see fit.


What?!?!?

The distribution platform should be able to take any channel they want, and package it to their customers.

The programmers should NOT be able to take any channel they own, and package it to their customers (the distributors)? It makes no sense.


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## jrb531 (May 29, 2004)

Greg Bimson said:


> What?!?!?
> 
> The distribution platform should be able to take any channel they want, and package it to their customers.
> 
> The programmers should NOT be able to take any channel they own, and package it to their customers (the distributors)? It makes no sense.


The programmers (ESPN, Disney, etc...) are forcing the distributors (Dish, DirectTV, Cable) to take "groups" of channels or they get none.

This is what I am reffering to. The distributors (Dish etc...) need to be able to create their own packaging groups based on single channel costs and not be forced by the programmers into what package their channel will be placed in or "if you want ABC channel you have to take XYZ channel"

If this was broken up then we could see much more creative and "logical" packages like a "sports package" that those who do not like sports would not have to pay for.

If ESPN were to keep raising prices to pay those spoiled overpriced babies who play sports then they might have to contend with lost revenue if they raised the price so high that people started to cancel the sports package.

Right now they can do and charge darn near anything they want because they "force" the distributors to package their channels with the lower packages.

Competion? Right now we have none and it will not change until congress steps in and levels the field.

If volume prices will kill off the small distributors then deal with that also. If they can break up AT&T and go toe to toe with Microsoft they can effect as least some minimal change in the pay TV monopoly.

-JB


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## Stewart Vernon (Jan 7, 2005)

Common myths... ESPN is why prices are so high. Nope. A La Carte will result in lower prices for all. Nope.

If most people truly wanted a la carte, then it would have worked when Dish offered it in the past... and more people would be "demanding" it. Most people want more bang for their buck, i.e. more channels for less money. The only way this happens is with bundling, not with individual pay-per-channel offerings.

I really wish all the people who want a la carte would realize that it is likely the channels they watch that would cease to be, and then they would have the choice of paying for channels they don't watch ONLY or no TV except OTA.... vs now they are paying a lump sum and getting channels they want w/ channels they don't.

I continue to encourage all those who think they are contributing to the evil empire by "paying for channels they don't watch" to cancel their cable/satellite and put their money where their mouths are. Clearly they are now sending a message to the providers that they feel they are paying what the channels they do watch are worth, otherwise they wouldn't keep paying the bill!

It is America, you can choose not to watch and not to pay if you feel you are being ripped off so badly... Also in America we all pay for stuff we don't use. My tax dollars have funded sports arena that I'll never go to, parks I'll never walk in, schools I don't have any kids to attend, medical bills that I myself am not incurring but am paying for others who can't, and the list goes on and on and on. But I also get the benefit of using things that I otherwise couldn't afford if I had to pay the whole cost of myself, that's the point of spreading the cost out.


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## Mike D-CO5 (Mar 12, 2003)

jrb531 said:


> The programmers (ESPN, Disney, etc...) are forcing the distributors (Dish, DirectTV, Cable) to take "groups" of channels or they get none.
> 
> This is what I am reffering to. The distributors (Dish etc...) need to be able to create their own packaging groups based on single channel costs and not be forced by the programmers into what package their channel will be placed in or "if you want ABC channel you have to take XYZ channel"
> 
> ...


 I totally agree with what you have said here. Both options should be allowed though. Both the present system with Aep /top180/top120/top60 and ala carte with possible theme packs .

Themes could be broken down into Childrens, Women's , Sports, News, Variety, Music, Locals . Then you could add the packs you want and exclude the others. For ever pack you add you could save more money. Like they do the movie premium packs now. The more you add the less the packs are till you hit the top with 36.99 a month for all the premium movie packs.

Both options should be allowed and if a few sports channels go out , a few niche channels go bye bye, then so be it.  The market will decide which channels should survive. The deciding factor should be CHOICE! The consumer should have the right to go with ala carte or stay with the programming packs as they are now.


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## dwcobb (Oct 13, 2005)

I think this would actually work and would be good overall for consumers. There would be some shakeout of channels that are unpopular, but those channels that charge the most would fine limited marketshare which would begin to hurt their advertising (because of fewer viewers to sell).

The technologicial issues of handling 11milllion different "versions" are really not that big in this day and age. 

But that said, I suspect it would work a little differently. Where you sign up for distinct programming segments, not necessarily individual channels:

ie, 

I would get--

Music Video stations
Home and Home Improvement stations
Science stations
etc.

Each of those would be groups of similar stations from different companies. But I could choose NOT to get sports stations, or shopping stations, etc.

Shopping stations could be "free" (otherwise they won't have many customers at all); Sports could be expensive (since I gather they usually are).

Companies could still link the carrying deals with E* and D* that they currently do (ie, if you want Nickelodeon, you have to have Nicktoons in your cartoon package too). And there wouldn't be very many versions to worry about.

So yes, I guess (looking back) that is like Canada.


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## BobMurdoch (Apr 24, 2002)

The problem is that cable and satellite can't get deals signed without bundling of less desirable channels with the ones that are "must have" (witness Viacom's threatening at gunpoint to not renew E*'s CBS carriage without Nicktoons, a channel that no one but a few 8 year olds want.... ditto with Disney and their locking of ABC with ESPN and all of the other ESPN and Disney channels ).

Much like the baseball players' union ability to block any change they don't like, it will be the same for distributors UNLESS they get overruled by threats from Congress (as they did to force the players to accept a steroid policy that the players all hated). The problem is that the baseball players don't line Congress's pockets like the NAB and the Media companies do. Therefore, look for this whole movement to run out of steam and get backburnered until it fades from memory. Ultimately, this is all much ado about nothing, since the status quo is too lucrative for the content providers, and they will bribe, er lobby as much as they have to keep it intact.


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## Richard King (Mar 25, 2002)

Charles Dolan, Cablevision CEO, breaks ranks.

http://www.thestreet.com/_googlen/s...339.html?cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA



> Breaking with the rest of the industry, Cablevision (CVC:NYSE) Chairman Charles Dolan Thursday released a statement in support of Federal Communication Commission Chairman Kevin Martin's pick-the-channels-you-like push.
> 
> "Cablevision agrees with FCC Chairman Kevin Martin's assertion before the Senate Commerce Committee on November 29 that the opportunity to purchase programming on an a la carte basis would be in the best interests of consumers," says Dolan. "Like Chairman Martin, we do not believe in the long term that selling programming a la carte will be detrimental to either programmers or cable operators."


More...


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## Stewart Vernon (Jan 7, 2005)

dwcobb said:


> I would get--
> 
> Music Video stations
> Home and Home Improvement stations
> ...


Except that there would be less people interested in paying top dollar for the Home Improvement and Science channels you mention... so either the price goes up and maybe you don't think it is worth that, or they go under.

The very channels that I regularly see folks saying "I just want that channel" are the ones that wouldn't survive a la carte pricing. These niche channels are dependent on the higher revenue from the other channels keeping the whole infrastructure afloat so that they can piggy-back on that. Without that backbone, the smaller niche channels even good ones couldn't survive the increase in price that would inevitably occur.

Think about it this way... HBO is a premium package because so many people are willing to pay $15 for it. If only a few people felt it was worth this amount, then the price would have to come down, it would have to merge with a package, or HBO would go away. This is why HBO can "command" a premium a la carte price!

If your Home Improvement channel was truly popular enough to survive a la carte... then it would already be commanding a premium in today's pricing structure OR be available as an a la carte channel.

The fact that there are very few a la carte offerings directly reflects the public's lack of interest in paying the price to have those channels a la carte. In this way, the market (free market) is already working to ensure we get the most options for the best price.



dwcobb said:


> Shopping stations could be "free" (otherwise they won't have many customers at all);


Shopping channels are already free. They pay to be carried, and their amount of payment is per viewer... so they pay to be carried based on Dish Network's subscriber base... and as such they in effect help to subsidize other smaller channels that you want to watch even if you (as I do) ignore the shopping channels.



dwcobb said:


> Sports could be expensive (since I gather they usually are).


All I ever see are rumor and innuendo in regards to the sports pricing. I suspect there are lots of "expensive" channels, and that they are directly reflective of those channels that most consumers watch/want... so that the more popular channels are the ones asking for more money. IF this means sports channels are the highest cost, then it must be because most people want them.



dwcobb said:


> Companies could still link the carrying deals with E* and D* that they currently do (ie, if you want Nickelodeon, you have to have Nicktoons in your cartoon package too). And there wouldn't be very many versions to worry about.


As others have pointed out... almost all channels that have had an a la carte option in the past, people chose packages over a la carte to the point that the cable/satellite companies had no reason to offer them.

DiscoveryHD, for example, is available a la carte for $7.99 OR you can get the whole Dish HD Pack for $9.99... so most of us pick the HD Pack.

If you just want HBO, then you can get that suite for a price... similar with SHO... but if you want HBO and SHO then it starts to look better to get the Everything package and save money... but still enough people just want HBO or SHO and are willing to pay $10-$15 to get them.

I doubt the $10-$15 price tag would fly on the Home Improvement channel.


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## Mike D-CO5 (Mar 12, 2003)

Dish once had something called "Dish Picks" . I think you could pick upto 10 sat channels instead of subbing to a basic pack and it costed like 9.99 a month. 

But sadly I believe the content providers will line the pockets of the Fcc and the Congress to prevent the whole idea of ala carte. This speculation will be for nothing I fear.


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## jrb531 (May 29, 2004)

Mike D-CO5 said:


> Dish once had something called "Dish Picks" . I think you could pick upto 10 sat channels instead of subbing to a basic pack and it costed like 9.99 a month.
> 
> But sadly I believe the content providers will line the pockets of the Fcc and the Congress to prevent the whole idea of ala carte. This speculation will be for nothing I fear.


If this did indeed allow you to pick from "all" the non-premium channels then I would think it would still be around. IMHO it prob was discontnued "not" due to lack of interest but more due to the programmers crying foul over them not being able to force more channels onto us.

How many people here would salivate over the chance to pick 10 for $10?

I know I would!

I agree they would line up to prevent us from having choice because what is good for the consumer is usually bad for big business!

Keep the darn packages but offer ala-cart for us "nuts" who want to spend tons for extra channels.

If ala-cart started tommorow you know what I would do? I would drop my 180 package to 60 and pay the $2 or $5 for the one channel in each of the 120 and 180 packs that I want instead of having to pay an extra $20 a month to subscribe to 180 "just" for two additional channels.

While "some" of you will say.... "boy is JB stupid for paying $5-$10 for only 2 channels when he could get 20 channels for $20" but others, myself included, would say "boy am I smart for saving $10 a month and only paying for the 2 channels I watch instead of $20 for an extra 18 channels I do not!"

It's all about choice and until we get some choice this issue will not go away. Now I am willing to "compromise" as I suspect others would and accept "theme packs" but until the government breaks up the monopolistic practices of the big programmers we will never see "real" theme packages.

And I ask again.... Why are there 3 main packages for Dish, Direct TV and cable? Seems kind of strange that "everyone" only offers three main packages.

Why not 4 or 5 or 6? What is so special about 3 and before a single person talks about some "study" that "every" distributor has done that points to how "only" three packages of mixed programming is what is best for both us and them please point out this study.

I maintain that the three packages are being forced on us because it increases the profits of both the programmers and distributors.

Tier 1 is always some basic "teaser" package that is used to try and lure people to the distributor. It is kept as low as possible, loaded with many cheap and free channels to keep the "brag" count of channels up.

Tier 2 is the "meat and potatoes" package that is what most people subscribe to. This is the big $$$ package and is the package that the programmers want to be in and thus the forced contracts that require the distributors to place certain channels in this package.

Tier 3 is the package that is filled with a few "goodies" along with "nitch" channels that some people do not want. Very few people subscribe to this package as compared to 1 and 2 and as such the programmers "hate" being placed here.

Who in their right mind, aside from the programmers, would be against "theme" packages such as:

1. Movies 
2. Classic TV 
3. Comedy
4. Sports
5. Educational
6. Kids

Now what can the programmers say? If it's a sports channel it goes in the sports package. Education goes in education etc... No silly contracts saying what goes where.

If the cost of sports goes up then the "Sports" package increases in price and "not" the other packages. If Discovery wants more $$$ then the education package goes up in price and not the others.

If ESPN increases prices enough then people will start to cancel the sports package so ESPN will have to be careful how far they go.... just like in other businesse.... you raise prices too much and you risk losing customers.

It would work better if we could individually cancel expensive channels but I would be happy if I at least had "some" choice by means of "theme" packages instead of the "zero" choice I have by only having three "mixed" packages.

"Some" of the pro-package crowd (some programmer plants to be sure!) liek to say that it all evens out in the end....

Example:

The sports people really do not want the education stuff and the education people do not want sports so one hand washes the other but you knwo what....

Does anyone really really think the cost of sports programming is the same as the other types of programming? It does "not" even out and the ESPN's of the world have one nightmare scenario in which they would have to survive on their own without them being forced on everyone.

I would venture to guess that if we knew the true cost of each channel as compared to the others you would see just how our of touch the sports channels have become. I would guess that the "average" sports channel cost 3-5 times (or more???) what the other channels cost.

Why do you think that ESPN can now outbid the free stations for all the good stuff now? Because they have near unlimited pockets. They can raise and raise and raise their rates and we "have" to pay them or as some here would suggest...

We can just cancel all Pay tv and send a message.

Well I can send a message without going to the extreame. I can contact my local congressman and tell them I do not like being forced to pay for things in which I do not want. Even with all the big $$$ the programmers toss around Washington cannot bypass a p-ssed off public and the movement is building.

Each year the programmers force the rates to go up and up. What was once $15 a month became $20 and $30 and $50 and now the average monthy bill is well over $60!

Some will say.... but we have so many new channels now but I say this.....

How many can I watch at one time???? Considering all the utter crap has to be used as "filler" on all these stations I wonder if we really are better off today.

When you can find the same shows on 8-10 different times a day on multiple channels you have to ask yourself how many channels we really do need.

-JB


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## Stewart Vernon (Jan 7, 2005)

jrb531 said:


> How many people here would salivate over the chance to pick 10 for $10?
> 
> I know I would!


And if the "Everything" pack only cost $25 then I'd buy that too. Wishing and reality are often very different. Sure, if everyone could have every channel they wanted and it would be $10 to get any 10, and no channels would be cancelled because of lack of subscribers... then yeah, in that fantasy perfect world I'd want it too.

But reality intervenes, and you could not get 10 channels for $10 if everything went a la carte. I really don't know where folks get the numbers on the wish list that are thrown around, but I can virtually guarantee that you'll never see a pick-anything for $1 or less per channel scenario.

The more popular channels will always cost whatever the market will bear... the less popular channels will always cost more OR will go away. Supply & Demand will determine that if a la carte became a reality.

Consumers obviously don't really want true a la carte, or we would have it already.



jrb531 said:


> If ala-cart started tommorow you know what I would do? I would drop my 180 package to 60 and pay the $2 or $5 for the one channel in each of the 120 and 180 packs that I want instead of having to pay an extra $20 a month to subscribe to 180 "just" for two additional channels.


And what makes you think it would be $2-$5 for the channels you want? I mentioned in another post... IF the channels you think are worth $2-$5 apiece for were worth that much then they would already be asking for and getting that amount now as part of the packages! The fact that they need to be in these packages with other channels that cost more and divided across all the subscriber (or most) base is the only way they can get their revenue.



jrb531 said:


> I maintain that the three packages are being forced on us because it increases the profits of both the programmers and distributors.


Well, yes. Business is funny that way, in that a good business tries to make a profit! A business will try to price its product as high as it can in order to maximize profit. Sometimes the market bears more, so they ask for more... other times the market doesn't, and they cut prices or kill the service/product. This is how business works.



jrb531 said:


> I would venture to guess that if we knew the true cost of each channel as compared to the others you would see just how our of touch the sports channels have become. I would guess that the "average" sports channel cost 3-5 times (or more???) what the other channels cost.


Even if your guess was on target, all it would mean is that the sports channels are wanted 3-5 times as much as the other channels! IF not, then they couldn't command the higher prices.



jrb531 said:


> Why do you think that ESPN can now outbid the free stations for all the good stuff now?


Because they are owned by a bigger company (Disney) with deep pockets? Disney owns ABC too, and yet ABC is FREE OTA! ABC has sports too... for free. How can they possibly do that? 



jrb531 said:


> Some will say.... but we have so many new channels now but I say this.....
> 
> How many can I watch at one time???? Considering all the utter crap has to be used as "filler" on all these stations I wonder if we really are better off today.


Because all of us have different tastes and want to watch different channels... and if we were each forced to pay full value just for what we watch, then the price would be higher than most of us could afford for those that only a handful of us want to watch... and then we'd have little or no choice at all beyond the free OTA.

If it weren't for the "shared revenue stream" of bundled packages allowing us to have variety... then most of us wouldn't be able to watch those channels you say are the only ones you want, because they would have never gotten off the ground at $10+ per channel a la carte.


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## jrb531 (May 29, 2004)

HDMe said:


> And if the "Everything" pack only cost $25 then I'd buy that too. Wishing and reality are often very different. Sure, if everyone could have every channel they wanted and it would be $10 to get any 10, and no channels would be cancelled because of lack of subscribers... then yeah, in that fantasy perfect world I'd want it too.
> 
> But reality intervenes, and you could not get 10 channels for $10 if everything went a la carte. I really don't know where folks get the numbers on the wish list that are thrown around, but I can virtually guarantee that you'll never see a pick-anything for $1 or less per channel scenario.
> 
> ...


Where do you get your numbers? I admit that I am pulling mine out my backside but I question how you can say that 3-5 times more people want sports channels and that is why it costs more. When does cost equal to subscribers? It costs ESPN the same to provide their channels whether they have 1 of 100,000,000 subscribers. It's the "profit" that is affected by what they charge.

Why is $10 for 10 channels too low? I have 100+ channels now for $50ish and while some are surely less than $1 in cost, others are greaters than $1 in cost but in "my" ideal setup we would pay for pay tv like we pay for utilities:

On our bill we would see 3 separate fees:

1. Programming cost (the amount the programmers charge for the channels we get)
2. Distribution cost (the amount Dish, DTV, Cable charge to deliver the programming along with equipment fees)
3. Taxes

This way we know when the costs goes up who is increasing what. Why would this be a bad thing? If ESPN want's to double their fee each year then so be it but everyone would know why our bill is going up. If Dish wants to raise distribution rates then let us know it's them raising our bills instead of the programmers. Everything would be on the up and up instead of "hidden" fees in one bulk charge.

Why is this required from utility companies and not pay TV? Seems like common sense to me.

I am not advocating that anyone lose money. I am advocating that the programmers and distributors have fixed costs (yes they change each year but they have a yearly budget like everyone else) and if channel "ABC" needs XXX number of dollars to cover costs they budget the number of subscribers they had last year, add XXX percentage of profit and then they change XXX amount per subscriber.

So now, for example, this channel is set at 75 cents per subscriber. Dish, DTV, Cable then adds 25 cents to "distribute" this channel (or whatever the number would be) and you have a list that shows this channel as costing $1.

Now you have a list of three "types" of channels.

Catagory one costs $1, Catagory two costs $2 and Catagory three $3 and you can pick and choose what channels you want.

Now the way I see it.... whether you have 1 channel or 100 everyone is making a profit but if you want to encorage more subscribers you can maybe offer discounts for certain numbers of channels....

Over $20 and you get a 5% discount
Over $40 and you get a 10% discount
Over $60 and you get a 20% discount

(Add taxes to above)

This will encourage and reward people who want more channels but not penalize people who only want 5 channels. Since you pay the same "rental" fee for the boxes whether you subscribe to 1 channel or 100 there is no problem there. If the programmers want to get more subscribers then they will try and keep the prices down...... LIKE ANY OTHER BUSINESS!

Now "if" as you say sports is so desired that 3-5 times the people want sports than the other channels then ESPN can charge $3 for each of their channels right? After all their channels are so in demand that people would pay "anything" in order to get them correct?

The "nitch" channels do not have even 10% the costs of an ESPN so they could be in the $1 catagory and still make $$$. IMHO the channels in the $1 catagory will not have the issue staying alive unless their programming really sucks.

IMHO the channels with the real issues will be those with "out of control" costs (read: ESPN) who are using to raising prices every year and causing our bills to sky rocket. This would be a BIG bucket of cold water on them if they suddenly had to do business like everyone else instead of having a blank check so to speak.

As far as requiring minimum amounts of programming... IE you can't have cable unless you subscribe to $30 worth of programming.....

Why do "other" utilities (and pay tv is a form of utility) not require this and still stay in business? When was the last time the electirc company told you you had to use $20 worth of electricity each month or they would cut you off? How about your phone? Heat? Last time I checked my heating bill got very low in the summer because I was not using it very much.

The only utility I see (and I see this coming to a head very soon also) that is using the pay tv model are cell phones. Cell phone companies make you pay a minimum and instead of lowering rates they just keep adding minutes but now "pay as you go" phones are becoming "huge" because the public has had enough of paying $50 a month for a cell phone they hardly use.

So like cell phones and in closing...

If you use your cell phone a ton then get a $75 plan...
If you use pay tv a ton then get a $75 package...
If you use your cell phone very little then get a "pay as you go" plan...
If you only watch a few channels then get ala-cart...

And this will not work why? It works for everyone else... why is pay tv exempt?

-JB


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## Stewart Vernon (Jan 7, 2005)

jrb531 said:


> Where do you get your numbers? I admit that I am pulling mine out my backside but I question how you can say that 3-5 times more people want sports channels and that is why it costs more. When does cost equal to subscribers? It costs ESPN the same to provide their channels whether they have 1 of 100,000,000 subscribers. It's the "profit" that is affected by what they charge.


You said sports channels cost 3-5 times as much as other channels... I merely suggested that IF that statement were true, then it must mean those channels are 3-5 times more popular than other channels. If that assertion wasn't true, then the market would not bear them charging that much!

Costs may be the same... but the amount they need to charge per subscriber IS dependent on the number of subscribers! IF costs are 10,000,000 in dollars and you have 10,000,000 subscribers, then everyone need only pay $1 to recoup the costs, and at $1.50 per subscriber you'd make 5,000,000 profit!

Made up numbers but the math works the same... IF that same channel only had 1,000,000 subscribers then everyone has to pony up at least $10 to make the same margin of profit and/or not lose money.

Big channels have more expenses and ask for more and are hopefully popular enough to get it. Small channels have less expenses, but very often have way less people interested in them.

IF Dish has 11,000,000 subscribers... just how many of them do you really think would want the Home Improvement channel if they had to purchase it individually? Right now, that channel (if it is in the lowest pack AT60) gets say 25-50 cents per subscriber and that adds up quickly!

BUT, if only those people who watched it paid for it... the price would have to go up dramatically. Simple math and logic are at work here.



jrb531 said:


> Why is $10 for 10 channels too low? I have 100+ channels now for $50ish and while some are surely less than $1 in cost, others are greaters than $1 in cost


You are failing (as are others) to take into consideration that your "less than $1" channels right now are in fact that low because they are part of a package that most of us are paying for! IF you take most of us away as subscribers, then the price of that channel has to go up to get to the same amount of revenue!



jrb531 said:


> but in "my" ideal setup we would pay for pay tv like we pay for utilities:
> 
> On our bill we would see 3 separate fees:
> 
> ...


Itemized bills is always a good thing. I would like to see such a bill too... but that isn't the same as a la carte. Billing that is broken out so we see how much we pay for different parts of the busines would be helpful.



jrb531 said:


> Why is this required from utility companies and not pay TV? Seems like common sense to me.


Pay TV isn't a utility. Arguably electricity and phone service are necessities in this day and age (though I could argue those aren't required since man has lived most of his life on the planet without them until the last 100 years or so)... Pay TV isn't nor will ever be a requirement. It is a luxury. It's not a utility.



jrb531 said:


> I am not advocating that anyone lose money. I am advocating that the programmers and distributors have fixed costs (yes they change each year but they have a yearly budget like everyone else) and if channel "ABC" needs XXX number of dollars to cover costs they budget the number of subscribers they had last year, add XXX percentage of profit and then they change XXX amount per subscriber.


So you are getting the math... you just aren't crunching the numbers the rest of the way... In a la carte, the less popular channels would have to cost more because the subscribers would go down. The popular channels would be able to stay relatively close to what they are now. The very channels many a la carte customers say they want a la carte, are the ones that the price would skyrocket!



jrb531 said:


> Now "if" as you say sports is so desired that 3-5 times the people want sports than the other channels then ESPN can charge $3 for each of their channels right? After all their channels are so in demand that people would pay "anything" in order to get them correct?


I didn't say that. You said sports costs 3-5 times more... I said if so, it means they are 3-5 times as popular which is why they can cost that much and still make money for the company offering them. I'm not sure they are 3-5 times the cost OR 3-5 times as popular. I'm just working within your logic as much as I can to make my points so we have some common ground.

As for the example... yes, if ESPN is worth $3 then it could ask and get that... if not, then it would have to drop price or increase subscribers or go out of business... just like any other a la carte channel... but I bet you that ESPN would be one of the last to go, and many smaller special interest channels would be long gone before that.



jrb531 said:


> The "nitch" channels do not have even 10% the costs of an ESPN so they could be in the $1 catagory and still make $$$. IMHO the channels in the $1 catagory will not have the issue staying alive unless their programming really sucks.


 How about Voom as an example... Voom barely got to 50,000 subscribers and needed to ask $40+ for their service as a standalone offering... and they folded because most people didn't want to pay that much.

But now, as part of a Dish carriage agreement... they are offered as a $5 add-on service, and can potentially make a lot more money because at $5 add-on many more of us Dish customers are willing to pay.

Real-world example of business... and how better to be part of another package than by itself.



jrb531 said:


> As far as requiring minimum amounts of programming... IE you can't have cable unless you subscribe to $30 worth of programming.....
> 
> Why do "other" utilities (and pay tv is a form of utility) not require this and still stay in business? When was the last time the electirc company told you you had to use $20 worth of electricity each month or they would cut you off? How about your phone? Heat? Last time I checked my heating bill got very low in the summer because I was not using it very much.


Lots of examples... First, as I said earlier... Pay TV isn't a utility or a requirement.

With your power company, you are only paying for what you use... With Pay TV, you are paying for the right to use whatever you want whenever you want. You aren't only paying when your receiver and/or TV is on... you are paying all the time for 24/7 privelege to use the services.

Same thing kind of happens with a phone... even plans that let you pay per minute, always have some minimum charge for the right to use the service 24/7.

Power companies, for the most part, are also regulated. If you have gas heat instead of electric... then you essentially pay in advance (buying the gas/fuel) for what you anticipate... run out of gas, no heat... so while you may use less some winters than others, you still pay a lump sum for the refill of gas and that changes year-to-year with the market and supply/demand.



jrb531 said:


> The only utility I see (and I see this coming to a head very soon also) that is using the pay tv model are cell phones. Cell phone companies make you pay a minimum and instead of lowering rates they just keep adding minutes but now "pay as you go" phones are becoming "huge" because the public has had enough of paying $50 a month for a cell phone they hardly use.
> 
> So like cell phones and in closing...
> 
> ...


All I can say is apples & oranges... and perhaps a twist of lime.


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## FTA Michael (Jul 21, 2002)

HDMe said:


> In a la carte, the less popular channels would have to cost more because the subscribers would go down.


What sets the price of a channel?

Let's look at magazines. (Yes, any analogy is necessarily apples and oranges, but stay with me for a moment.) Magazines have relatively large fixed production costs but low incremental costs per extra subscriber. Most magazines also sell advertising, so that income is used to offset costs and increase profit. With few exceptions, each magazine subscription is a la carte. It's not perfect, but it's a decent analogy for a cable/DBS channel.

What does a magazine do when its readership drops off? Sometimes it lowers its price to become more attractive. Sometimes it cuts back its page count or publication frequency, reducing its fixed costs per issue. Sometimes it shifts focus to regain old readers or grab a whole new market. Sometimes it does some combination of these things. Sometimes it just dies, sometimes abruptly, sometimes not. But rarely does a magazine raise its cover or subscription price as a response to a drop in the number of subscribers. (It'll raise its rates when it thinks that'll make it more money in general, but that's a different topic.)

I'm happy to say that no one knows the full effects of a la carte might be, just as no one could predict the airline industry after deregulation. There are legitimate concerns about some channels that may die after they lose their bundling protection, but that could also free transponder space for quirky new startups that appeal to different market slivers. ($1/month for the Model Train Network?  ) Or not.

Take a deep breath. Heck, we don't even know what kind of a la carte we're talking about! (Theme bundles? Each channel available separately? Reverse a la carte to save 15 cents a month for dropping Nick Toons?) In the unlikely event of forced a la carte, we'll learn more of the details as they unfold.


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## jrb531 (May 29, 2004)

I just had to add one thought...

Since when does cost equate to popularity? Maybe ESPN costs a ton more because they pay too much to the sports teams to cover the high pay checks of the players?

Maybe the players make too much because the ESPN's of the world will pay "anything" as long as they have the deep pockets of "forced" subscriptions to their channels.

They seem to feed off each other and are currently out of control IMHO. 

A good example of this is Professional Hockey. The sport has grown so unpopular (thanks Mr. Wirtz and others!) that not only can they "not" get any TV revenue but they often have to pay radio and TV to carry their games.

Because of this the "average" hockey pay check has gone down.

So ESPN wants to outbid the networks so what do they do? Raise rates until they can outbid all the networks who rely on "only" ads while ESPN can gain both AD and pay tv revenue.

All this $$$ then goes to "fuel" the insane cost of the player saleries and the cycle continues.

How to stop this? Put ESPN in a separate "premium" package and let the people who feel the cost is worth it pay for it. If HBO can charge $12+ a month then so can ESPN.

I bet the subscriber count would drop by at least half if you did this. Would this mean that ESPN would go under? Of course not!

What it would mean is that next contract negotiations when ESPN is going after the NFL contract that ESPN would not offer 10 zillion $$$'s for the broadcasting rights. The sports teams will then have less $$$ to pay the overpaid players and those poor players "might" have to make due with making 1 million a year instead of 5 million 

-JB


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## Mike D-CO5 (Mar 12, 2003)

Amen Brother! I agree totally.


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## Stewart Vernon (Jan 7, 2005)

carload said:


> Let's look at magazines. (Yes, any analogy is necessarily apples and oranges, but stay with me for a moment.) Magazines have relatively large fixed production costs but low incremental costs per extra subscriber. Most magazines also sell advertising, so that income is used to offset costs and increase profit. With few exceptions, each magazine subscription is a la carte. It's not perfect, but it's a decent analogy for a cable/DBS channel.


I know of some comic books that are still $2.25 cover price when new, but I've seen very few magazines for less than $4.99 on the newsstand. Assuming a similar comparison to a magazine being a la carte programming... it would tend to support the theory that the price of the individual magazine needs to be higher than if the same company could sell you subscriptions to 60 magazines simultaneously.

I mostly "argue" when the examples of "I'd pay $1 per channel" come up, as if there is some real reason to assume that would be the price structure. The channels, like magazines, would need to be several dollars upwards to $10+ I suspect.

Also, to be fair in comparison... Dish Network then is sort of like your local newsstand where you buy the channel/magazine as opposed to buying directly from the programmer/publisher. The newsstand only carries titles that it has regular sales for OR titles that are 100% returnable for credit (so the newsstand risks no money on carrying the title). Direct Sales comic specialty stores, for instance, have no returns policy on regular monthly titles and order according to their previous months' sales and expected future sales if they order extras... whereas newsstands actually don't get to place orders per se, but rather are shipped the same amount they got last month - the number of returns they sent back... if they consistently sell out, they can get increases but it isn't automatic except for new titles which are printed in some "guesstimate" quantity to get sales figures for future printings.

I'm not sure all of the mechanics to how magazines are sold are directly transferrable to TV channels... but perhaps some of the mechanics are similar enough.



carload said:


> What does a magazine do when its readership drops off? Sometimes it lowers its price to become more attractive. Sometimes it cuts back its page count or publication frequency, reducing its fixed costs per issue. Sometimes it shifts focus to regain old readers or grab a whole new market. Sometimes it does some combination of these things. Sometimes it just dies, sometimes abruptly, sometimes not. But rarely does a magazine raise its cover or subscription price as a response to a drop in the number of subscribers. (It'll raise its rates when it thinks that'll make it more money in general, but that's a different topic.)


I can't speak as much for general magazines, but for comics... more than one comic has seen an increase in cover price at the end of its life to see if they can still keep the current readers at a higher price and keep the book afloat. Usually this price increase hastens the exodus and kills the title quicker, but that actually saves the company money if everyone cancels at once so they know not to keep throwing money at it for a few months.

But a company that only publishes a few titles? Harder to get started, print enough copies, and keep the price down enough to get people to try the books... whereas a big company like a Marvel or a DC can make some mistakes and recover. Marvel came back from bankruptcy in the last few years after all! And they also publish a lot of garbage to go with the good... but small press publishers, even ones that publish good titles, often can't get the attention and audience enough to keep them afloat and make a go of it.

In TV land, I suspect new channels from anyone other than the major players would become a rarity if only a la carte were available... because who would pay $10 or even $5 to a new channel from Joe Blow's production company?


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## cheer (Nov 9, 2005)

jrb531 said:


> Since when does cost equate to popularity? Maybe ESPN costs a ton more because they pay too much to the sports teams to cover the high pay checks of the players?


The price of a product or service is a function of supply v. demand. Of course, the price can't (or shouldn't) drop below the cost of production.

But in the main, what it costs to produce an item is only a secondary consideration. Supply and demand is the main thing. So, if ESPN costs more (and I have no idea whether that's the case) to carry, then obviously the carriers are willing to pay that additional cost. They therefore must believe that ESPN will attract new subscribers and aid in retention of existing subscribers more than, say, HGTV.

This is as it should be.

Now the content providers have every right to package their channels together. There are plenty of things you can't buy separately. If Viacom wants to insist that in order to get CBS the carriers have to buy a package that also includes Nick Toons, so be it. It's their product.

The last thing I want to see is the FCC mucking about with this. Whenever the government tries to "adjust" the free market, it ends up costing us more money. Every single time.

My $0.02.

--chris


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## Stewart Vernon (Jan 7, 2005)

cheer said:


> The last thing I want to see is the FCC mucking about with this. Whenever the government tries to "adjust" the free market, it ends up costing us more money. Every single time.


Agreed.

I wonder how many folks were paying attention to the FEMA mess this year when it was discovered that folks could only register online at the FEMA Web site for aid if they used Internet Explorer browser! No Netscape, and no Firefox, and if you were a Linux user instead of Windows? Tough luck for you!

Quite interesting when FEMA is part of our same government that went after Microsoft forcing them to unbundle Internet Explorer (or rather wanting to force that) as part of anti-trust charges... then our government makes sure they are only compliant with the one thing they fought for customers not to have to use!


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## Nick (Apr 23, 2002)

HDMe said:


> You said sports channels cost 3-5 times as much as other channels... I merely suggested that IF that statement were true, then it must mean those channels are 3-5 times more popular than other channels...


Your logic is flawed and your assertion fails.


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## cheer (Nov 9, 2005)

Nick said:


> Your logic is flawed and your assertion fails.


How so? Do you dispute that the selling price of something is tied to demand?


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## Stewart Vernon (Jan 7, 2005)

Nick said:


> Your logic is flawed and your assertion fails.


How so?

Do you mean to imply that people pay more for channels they don't like? That makes no sense.

Typically, companies charge whatever the market will bear... so if people are lining up to pay the price, then that must be what most people feel it is worth.

You simply cannot say "your logic is flawed" without following up. Without follow-up, most assuredly your assertion fails.


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## Geronimo (Mar 23, 2002)

Yes price is tired to demand but not as directly as you suggest. The number of people who wnat the channel isa factor but so is how badly they want it and whether there are other suitable alternatives.


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## cheer (Nov 9, 2005)

Geronimo said:


> Yes price is tired to demand but not as directly as you suggest. The number of people who wnat the channel isa factor but so is how badly they want it and whether there are other suitable alternatives.


Which would all be part of "demand," would it not?

More specifically, "the number of people who want the channel" is a factor of how badly they want it and the presense of alternatives. If I'm a big fan of MLB and the NFL, I might be willing to pay more for ESPN to get their games. On the other hand, if I like MLB and the NFL but can live without the ESPN telecasts, then I won't be as willing to pay as much (unless they have something else that I want of course).

If there are alternatives for the programming, then again that reduces the amount I'm willing to pay because I have choices.

All of that = demand, or demand and supply -- the alternatives issue corresponds to scarcity.

--chris


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## FTA Michael (Jul 21, 2002)

cheer said:


> If Viacom wants to insist that in order to get CBS the carriers have to buy a package that also includes Nick Toons, so be it. It's their product.


If you were to say that Viacom should be free to bundle, say, MTV with Nick Toons, I might agree. But the bundling of OTA programming, which relies on the use of government licenses to use a scarce public resource, rubs me the wrong way.

The whole must carry/retransmission payments structure gives all the leverage to the broadcasters already. When a media giant uses that leverage to force another channel onto a system, that just doesn't seem right, IMHO.


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## Geronimo (Mar 23, 2002)

cheer said:


> Which would all be part of "demand," would it not?
> 
> More specifically, "the number of people who want the channel" is a factor of how badly they want it and the presense of alternatives. If I'm a big fan of MLB and the NFL, I might be willing to pay more for ESPN to get their games. On the other hand, if I like MLB and the NFL but can live without the ESPN telecasts, then I won't be as willing to pay as much (unless they have something else that I want of course).
> 
> ...


If you had been reading the thread you would know that I was not siputing that demand wasa factor. I was simply disputing that the law of supply and demand worked as one poster had characterized it. It was posted earlier that if one channel can charge 3 x what another does that must mean that there are threee times as many people who want to see it.


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## cheer (Nov 9, 2005)

carload said:


> If you were to say that Viacom should be free to bundle, say, MTV with Nick Toons, I might agree. But the bundling of OTA programming, which relies on the use of government licenses to use a scarce public resource, rubs me the wrong way.


Well I'd argue that they aren't that scarce, and the fact that government licenses are required is kind of arbitrary anyway. But in any case, once you talk about putting the programming on cable/satellite, it's no longer "OTA." The OTA programming is still there, still free and licensed by the government.


> The whole must carry/retransmission payments structure gives all the leverage to the broadcasters already. When a media giant uses that leverage to force another channel onto a system, that just doesn't seem right, IMHO.


I guess we'll have to agree to disagree. To me it's no different from having to buy the Weird Al box set just to get those three tracks that aren't on any CD.


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## cheer (Nov 9, 2005)

Geronimo said:


> If you had been reading the thread


I've read the entire thread. No need to be snippy.


> you would know that I was not siputing that demand wasa factor. I was simply disputing that the law of supply and demand worked as one poster had characterized it. It was posted earlier that if one channel can charge 3 x what another does that must mean that there are threee times as many people who want to see it.


That wasn't clear in what you said. You said:


> Yes price is tired to demand but not as directly as you suggest. The number of people who wnat the channel isa factor but so is how badly they want it and whether there are other suitable alternatives.


And I was merely pointing out that "how badly they want it" and "whether there are other suitable alternatives" are actually both part of demand.

--chris


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## Paul Secic (Dec 16, 2003)

Has Congress passed the Digital Transition bill yet? If not we won't have full HD for years.....


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