# Support Builds for a la Carte



## Chris Blount (Jun 22, 2001)

The American Cable Association lent support to Rep. Nathan Deal's amendment on tiering and a la carte programming issues, a proposal that was presented - then pulled - by the Georgia Republican during a hearing on satellite TV legislation this week.

The ACA and its president, Matthew Polka, said Deal's amendment in the House Telecommunications and Internet Subcommittee addresses the issues of forced carriage by programming giants and escalating rates for content. The move could set "the congressional stage" for a market-based solution that will give consumers and cable/satellite providers more choice and programming options, Polka said.

"Rep. Deal's amendment will transform current 'take it all or get nothing' programming contracts into voluntary opportunities for video providers to sell programming services on basic, expanded basic, special tier or a la carte as consumers and the local market dictate," Polka said. "Cable and satellite subscribers in all markets across the country will benefit from Rep. Deal's thoughtful proposal on this complex issue."

ACA represents the interests of small, rural cable operators.

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


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## SPENCER (Dec 19, 2003)

I hope this goes through, but the National Association of Broadcasters (NAB) is way too powerful and it is an election year which only adds to their power (due to their control of the local stations)


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## jrbdmb (Sep 5, 2002)

NAB may not necessarily care about his one ... but Turner, Viacom/CBS, Disney/ABC/ESPN, GE/NBC, News Corp/FOX certainly will. Expect this one to go down in flames ...


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## gradnite (Apr 18, 2004)

I do not want this. If this happens, for those of us who still want all the channels, we will pay more.


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## FTA Michael (Jul 21, 2002)

gradnite said:


> I do not want this. If this happens, for those of us who still want all the channels, we will pay more.


We don't know what a la carte would do to prices. Some say they'd go up, some say they'd go down. It's particularly hard to speculate considering we don't know what a la carte system they'd use (individual channels, theme tiers, or "opt-out" reverse a la carte).


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## JohnL (Apr 1, 2002)

carload said:


> We don't know what a la carte would do to prices. Some say they'd go up, some say they'd go down. It's particularly hard to speculate considering we don't know what a la carte system they'd use (individual channels, theme tiers, or "opt-out" reverse a la carte).


We can make a reasonable assumption though. Since Most Third Party providers need to Average of about 50-60 dollars per subscriber to be able to make money, you would likely see some sort of Delivery Charge of 15 to 20 dollars per sub for all Ala Carte subscribers, as well as the Per channel retransmission costs that would spiral upwards if these Channels lost subs and the corresponding advertising revenue.

So lets say that Channel A lost 40-60 Million subscribers at .50 cents per sub under the current system as well as their Advertising revenue based on those SUBS. How does that channel stay on the air, oooh they soak the rest of the subs that want it by increasing rates from .50 per sub to $2 to 3 per sub so each ALa Carte channel might cost $2-3 and more for Sports channels up to $4 -6 per channel.

This gets the Ala carte subscriber to average $2-5 per channel as well as the delivery fee of 15 to 20 bucks and you have a Ten Channel ALa Carte package of $40- 60 bucks IF United States Multichannel providers went to an all Ala Carte delivery method. In the end you will likely pay as much or more than you do now especially if you have Cable as you would be required to have a Digital Addressable Box for each and every TV in an Ala Carte world and NO more FREE extra outlets for cable SUBS.

After saying all of this, almost all retranmission consent agreements that MSO's have with the content owners specify, carriage terms. In most cases it REQUIRES the channel to carried ONLY in specific programing tiers as well demanding sister channels be carried as well. Could or would the Congress pass a Law that erased all Content Owners rights or agreements that are already in place with MSO's, I highly doubt it.

John


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## FTA Michael (Jul 21, 2002)

John,

Your arguments seem to be based on the idea that Company A needs to make $X. But that's a faulty premise. Public companies have an obligation to make all the profit they can, and private companies tend to do so anyway. 

Companies set prices to maximize revenues. If a carrier could make more money by charging an extra $2/month, it would. The price is set by the competitive marketplace. When the rules change, companies still try to maximize revenues, but their profits change.

I agree that a la carte would probably cause some channels to go off the air. I figure the 7th or 8th Discovery Network channel, forceably unbundled, would see its programming rights money drop like a rock, and it's not like it had a ton of ad money anyway. But other channels may take their place, and all channels would look at rights fees vs. subscriber numbers for ad revenues as they made their rates competitive.

Most scenarios suggest that programming networks will see reduced profits. Beyond that, we just don't know what will happen, any more than one could easily predict all the hub-and-spoke architecture, uneven pricing, and generally lower fares that resulted from airfare deregulation.

Can Congress pass such a law? Sure, they can justify/rationalize it as an FCC issue (yeah, I know it's not OTA, but just watch), an FTC issue (illegal bundling in interstate commerce?), or even a copyright issue (choosing channels becomes part of Fair Use). Will Congress pass such a law? Let's see, it's likely to reduce the profits of large media companies, and the only group that might benefit is consumers. Maybe not.


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## tampa8 (Mar 30, 2002)

I also have to think some channels will need to go up in price quite abit to stay afloat. It could be said that those channels need to die if they can't get enough subscribers, but that to me defeats one of the main purposes of newer technology - being able to provide something for almost everyone. Further, won't some of the most popular channels actually insist on being separate? The problem now is that when a popular channel wants to go up in price alot, it makes the whole package go up not giving a choice to those that would just drop it. That is what Charlie fights now. By being separate (think ESPN for instance) you could end up paying alot more by them being separate - they will maximize the point of what people will pay and how many will pay it, and It seems to me it will be alot higher than now. I can easily see where you will have a choice of channels, but the actual cost for those channels added together would be as much or more than now, for alot less channels.


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## FTA Michael (Jul 21, 2002)

tampa8 said:


> I also have to think some channels will need to go up in price quite abit to stay afloat.


Maybe, but even that does not necessarily lead to price increases.

Suppose I run a burger stand in a food court, and for some reason when I do the numbers, I see that I need to sell burgers for $10 each to break even. I could raise my burger price to $10, but I still won't break even because few customers will buy my $10 burgers. With competition, if I need that much to stay afloat, I simply won't stay afloat.

What would probably happen is that the folks who run each channel will take their costs, ad revenue based on number of viewers, and programming fees, and plug those numbers into a spreadsheet to determine the optimum price to charge for the channel. If the ad revenue is good, getting 50 million viewers for free may be better than 20 million paying 10 cents each.

It's possible that the price of some bundled channels will go down as each has to attract viewing customers individually. It's likely that the price of at least a few channels will go up; RSNs are good candidates. But as to the impact for most folks' bills, we just don't know, partly because we don't even know any implementation details. For example, could Discovery offer D-Kids "free" to customers who buy another couple of channels? Would a la carte be limited to theme bundles a la Canadian DBS? We just don't know.


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## ypsiguy (Jan 28, 2004)

Canada has a tier-based delivery scheme and it works just fine there. It would work well here, also. Costs would go down for most, as they would adjust their subscriptions to more accurately reflect their viewing habits. For instance, I have no children, therefore I would dump the children's programming. Folks, choice is GOOD.


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## Guest (May 3, 2004)

Chris Blount said:


> The American Cable Association lent support to Rep. Nathan Deal's amendment on tiering and a la carte programming issues, a proposal that was presented - then pulled - by the Georgia Republican during a hearing on satellite TV legislation this week.
> 
> The ACA and its president, Matthew Polka, said Deal's amendment in the House Telecommunications and Internet Subcommittee addresses the issues of forced carriage by programming giants and escalating rates for content. The move could set "the congressional stage" for a market-based solution that will give consumers and cable/satellite providers more choice and programming options, Polka said.
> 
> ...


I have four letters for you: ESPN
Fact: According to one of the top news consultants in the country, only approx 10 percent of all television viewers actually care about sports.

10 percent.

Viewing of sporting events overall, likely quite a bit higher.

But not to the point where a significant enough number of people would keep ESPN. ESPN has a CORE group of fans, not not a majority.

More people would not include ESPN in ala carte programming, I know at our house we never watch it.

And the powers that be ain't about to let that little gravy train derail, and another reason why ala carte programming will never, ever, happen.

ESPN could not survive the way it is under such a plan.

So flame away ya'll... I know the subject will come up again, and again, and again, and again, and again, and again.

-Earl
Yankee born Southern bred and thats the fac' Jack


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## BobMurdoch (Apr 24, 2002)

Plus look at some of the other niche channels. I never watched the Travel Channel, but now I do thanks to the World Poker Tour. You never know when the next "must see" show will pop up in a weird place....


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## lee635 (Apr 17, 2002)

RE: "This gets the Ala carte subscriber to average $2-5 per channel as well as the delivery fee of 15 to 20 bucks and you have a Ten Channel ALa Carte package of $40- 60 bucks IF United States Multichannel providers went to an all Ala Carte delivery method."

What??? Pay channel packages aren't even $5 per channel? HBO is like $13.00 for 5 or 6 channels. I think you may be exageratting a bit. Let's see now, I have AT150, of which let's ballpark that about 80 of those are real cable channels and of that, we watch less than 25 on a regular basis...So as long the ala carte rate is less than 3 times the bundled rate, I save money. 

Of course, you never mention that maybe they retool the programming so that more people want to watch. As for ESPN, it would be a good thing for them to go back to the sports leagues and tell them, sorry no more outrageous deals for your games.



JohnL said:


> We can make a reasonable assumption though. Since Most Third Party providers need to Average of about 50-60 dollars per subscriber to be able to make money, you would likely see some sort of Delivery Charge of 15 to 20 dollars per sub for all Ala Carte subscribers, as well as the Per channel retransmission costs that would spiral upwards if these Channels lost subs and the corresponding advertising revenue.
> 
> So lets say that Channel A lost 40-60 Million subscribers at .50 cents per sub under the current system as well as their Advertising revenue based on those SUBS. How does that channel stay on the air, oooh they soak the rest of the subs that want it by increasing rates from .50 per sub to $2 to 3 per sub so each ALa Carte channel might cost $2-3 and more for Sports channels up to $4 -6 per channel.
> 
> ...


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## Van (May 4, 2004)

I'll take it with pleasure, theres so much useless crap on pay services now that out of 200 channel type packages I could and would end up removing about 120 of those channels that are useless filler.


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## Guest (May 7, 2004)

Carload's burger reference got me thinking. If I go to McDonald's and order a Big Mac, fries, and a Coke, I pay a certain price. If I order the same thing separately, I pay more. Bundling the order costs less. Same thing applies here. Bob mentioned the poker tour as an example of a good program popping up on a random channel. I agree. Having a bunch of channels benefits the majority of people, and offers a diverse slate of programming. By the way, if a new company wants to offer a new channel to the masses, it would be much easier to add it to a "bundled" set of programming. A la carte would ruin the good thing we've had for many years.


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## Bob Haller (Mar 24, 2002)

Ahh ala carte should be a OPTION for every subscriber. They can then all CHOOSE what they want!

What everyone ceases to realize ala carte will REQURE addressable boxes at every cable subs tv. That will turn cable on its ear and likely require upgrading every cable sub to digital.


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## Nick (Apr 23, 2002)

Don't get your panties in a wad. This is much ado about nothing. Ala carte cable can and will co-exist with packages or tiers. It's just that cable-ready tvs will become history as cable subs are forced to rent a stb for every tv in the house @ $19.95/m.


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## Bill R (Dec 20, 2002)

Bob Haller said:


> What everyone ceases to realize ala carte will REQUIRE addressable boxes at every cable subs tv. That will turn cable on its ear and likely require upgrading every cable sub to digital.


Many cable companies already realize that. For example, Time Warner (in Cincinnati) now only supplies addressable digital boxes.

Unless there is some ruling that requires programmers to unbundle their services, ala carte will likely never become available to customers because the PROGRAMMERS won't allow it. They will continue to demand that the distributors bundle their crap channels with the "cream".


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## djlong (Jul 8, 2002)

QUite frankly, the cable channels would have to change the way they think about subscribers.

They'd have to go from seeling themselves as "We're in 'X' million homes" to "We have 'X minus Y' million homes REQUESTING us - higher value!"

There are packages that I would subscribe to - and I don't think that the Discovery networks (one I would buy) would charge more than HBO, which I also get.

There are many channels I would avoid like the plague. I never mind them being on the dish, so long as they don't get rid of channels I like in order to carry ones I don't.


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## BobMurdoch (Apr 24, 2002)

Years ago, SportsChannel carried the Mets games in New York and it cost $10 a month to subscribe. The price fell 80% when EVERYONE had to get it (on that middle tier).

I'm worried that ESPN and a bunch of other channels would do the same if they made EVERY channel voluntary. I think this is a big mistake as only the most low usage households would see any savings..... The rest of us "power" users who watch dozens of channels would see our rates magically go up, I'm afraid. Not to mention the factthat many channels will just dry up and blow away as their small niche audiences are unable to cover the costs of production.


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## Mike Richardson (Jun 12, 2003)

crest said:


> Carload's burger reference got me thinking. If I go to McDonald's and order a Big Mac, fries, and a Coke, I pay a certain price. If I order the same thing separately, I pay more. Bundling the order costs less. Same thing applies here. Bob mentioned the poker tour as an example of a good program popping up on a random channel. I agree. Having a bunch of channels benefits the majority of people, and offers a diverse slate of programming. By the way, if a new company wants to offer a new channel to the masses, it would be much easier to add it to a "bundled" set of programming. A la carte would ruin the good thing we've had for many years.


But if you never drink the Coke and just throw it away, then it would be cheaper to buy just a Big Mac and fries. That's the whole point of a-la-carte.


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## lee635 (Apr 17, 2002)

Mike Richardson said:


> But if you never drink the Coke and just throw it away, then it would be cheaper to buy just a Big Mac and fries. That's the whole point of a-la-carte.


Exactly. The argument I'm hearing is sort of like gorking out at a buffet in order to get your money's worth. Sure you can do that, and it is cheaper than buying all the items individually, but why?

Anyway, why not continue to offer packages for the pay-one-price crowd and offer ala carte as an option. Analog satellite did this for years. 4DTV offers several package options. 

What I hate is that my kids like Discovery Kids, but we have to subscribe all the way up to AT180. We can't buy the AT60 and add the channels that are only in the AT180 package (but not in the 120 package). At least it should be, once you buy the basic package, you can pick and choose any other package available without having to buy an intermediate package in order to get up to the package you want. That would be a good compromise that would not turn the industry on its head, but after the lobbyists get finished....


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