Print 54 comment(s) - last by CM40484.. on Mar 21 at 8:15 PM

Move could hurt sports broadcast industry, weaker channels

It's not just you that's irritated that you're paying for television channels you don't want due to bundling.  Cable service providers are also paying a similar price.  And while some -- like Time Warner Cable Inc. (TWC) -- are affiliated with those who profit off bundling themselves, many of the cable market's new players are purely on the losing end of the equation.

Verizon Communications Inc. (VZ), co-owner of America's largest wireless mobile device service network and the FiOS fiber-optic cable service, is looking to put its foot down and reshape a consumer's cable-shopping experience to a "buffet" of sorts.  Chief programming negotiator at Verizon Terry Denson comments, "We are paying for a customer who never goes to the channel."

In an interview with The Wall Street Journal he explains that Verizon is in negotiations to give customers access to the entire spectrum of cable channels (besides a handful of premium channels).  

Verizon FiOS
Verizon is upset about paying bundlers for content its customers don't necessarily want.
[Image Source: Android Community]

Whenever Verizon's set-top box documents a customer watching a particular channel for more than 5 minutes, Verizon would pay the bundler for that channel, and charge the customer for that channel.  Mr. Denson says the deal would cover a "significant number of channels".  He comments, "If you are willing to give a channel five minutes of your time, the cash register would ring in favor of the programmer"

While the idea of paying based on viewership is relatively old, the mechanism for doing so -- the internet connected set-top box -- is relatively new.  In the past there was no way to collect this kind of real-time viewership information, making viewership based pricing more problematic.

Verizon's initial talks have focused on "midtier and smaller" companies.  The executive said the negotiated deals/service pricing scheme could extend to on-demand viewing and mobile device viewing, as well.

II. Pushback From Broadcast Sports, Big Content Providers

Larger firms like Viacom, Inc. (VIAB) and Walt Disney, Comp. (DIS) may be reticent to sign up for the bundling scheme, though.  They often use bundling to prop up content that has low viewership, but which they deem is important.  As Mr. Denson complains, "It feels like certain content players who have a suite of channels attempt to lever the strong ones to prop up the weak ones…without any empirical data to show that these channels are actually viewed or wanted,"

The industry shift may also upset the big-money professional sports industry.  Much of the money of professional sports comes from broadcast deals, and much of that revenue in turn comes from fees associated with bundled channels.  If fees were solely viewership based, fees could dramatically drop.

NFL postgame
Bundling boosts sporting revenue; eliminating it could hurt professional sports.
[Image Source: U.S. Presswire]

For example market researchers Nielsen Holdings NV (NLSN) report that ESPN (owned by Disney only averaged 1 million viewers for content within the first week of its airing.  By contrast Comcast Corp.'s (CMCSA) USA Network (bundled by subsidiary NBCUniversal) averaged 1.3 million viewers within the first week, on average.  But ESPN cost $5.04 per subscriber, while USA Network only cost $0.68 USD, on average.

Bundling fees don't always line up with viewership. [Image Source: WSJ]

Bringing fees in line with viewship could dramatically cut broadcast sports revenues, and in turn sports owners' profits and athlete salaries.

For those reasons some don't believe the effort will catch on.  One unnamed executive is quoted as saying that the move would be "resisted fiercely", while another unnamed expert suggest this kind of effort had been around for years and never gone anywhere.  The second source suggested that "unless there is a giant seismic shift", the bundling would continue much as it is today.

Source: WSJ

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By Arsynic on 3/19/2013 9:16:00 AM , Rating: 1
The cable company charges you based on what the programmers charge them. The programmers sell a bundle of channels and the cable companies sell you the same bundle for a profit.

When you go to the store and you want just one beer, you have to buy the whole 6 pack. It's not the grocery store's fault, it's the vendor.

We need to focus on the real enemy here--the greedy networks and programmers packaging 10 shitty channels with a couple of great ones.

Some channels need to die--yes I'm talking about you MSNBC. Why the fuck is this channel still on the air? The Daily Show and Colbert Report fill their target audience's "news" fix.

By morgan12x on 3/19/2013 11:38:09 AM , Rating: 2
Except I can CHOOSE to buy either 1 beer OR a 6 pack. I'm not forced to buy the 6 pack if I don't want it.

By CaedenV on 3/19/2013 11:39:49 AM , Rating: 2
But for the end user there is no recourse against the programmers, just the cable provider themselves.

Personally I have never had cable TV. My parents tried to order it when I was a kid, but the local cable company was so incompetent that they didn't realize that there was a cable line on our street, so we never got it. As an adult I have very much enjoyed Netflix, but we are coming up on the end of that as we have watched just about everything that we are interested in watching on there. I would switch to Hulu but the quality is junk, and I refuse to pay for commercials. Other streaming providers are either too expensive, or simply offer the same stuff that Netflix does.

So our solution? We are going to start our own in-home 'cable company' of sorts. Average cable bill is ~$100/mo, so we are going to dedicate that much a month towards media for a few years. There will be some upfront costs associated with getting a home server, some nice big HDDs in RAID, and some good quality ripping software. But after that DVDs and blurays are dirt cheap these days.
No more commercials, no fear of loosing content due to consolidation or renegotiations, no more quality switching due to bandwidth issues, content easily available on all of our devices, and after we get a decent library up and running then we can cut way back or remove that part of the budget and still have access to all of our content. I think we are oddly at a point again where owning your own content again, it doesn't work for people who like news or sports programming, but for people like us I think it will work quite nicely.

By timothyd97402 on 3/19/2013 3:57:30 PM , Rating: 2
I am continually amazed by people who think their opinion is the right one. I watch a couple of hours of MSNBC on average a day. I know I am in a minority in this regard but there are quite a few other folk who do watch MSNBC. It should be axed just because you don't like it?

I have to pay for several FOX news channels that I never watch. I would like to be able to turn those channels off and not pay for them but I don't think they should be banished just because I have no use for them.

Now as for all those sports channels, I never watch them, ever but I bet they represent about @0% of my cable bill.

By CM40484 on 3/21/2013 8:09:59 PM , Rating: 2

So you are the guy watching MSNBC.

Amazing you are real......

"When an individual makes a copy of a song for himself, I suppose we can say he stole a song." -- Sony BMG attorney Jennifer Pariser

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