Friday, October 29, 2010

Fox-Cablevision fight shows the need for a la carte programming choice

News Corp.’s Fox Networks Group and Cablevision can’t agree on what Fox’s programming is worth.
If Fox programming were a consumer good like soap or blue jeans, the free market system would decide its value. Instead, since cable and satellite TV services bundle programming into packages, they have to guess what the value of the programming is to end users.
So for consumers to get one channel they really want, such as ESPN, CNN or Discovery, they have to purchase a bundle with a lot of stuff they don’t watch. This model subsidizes lots of programming that might not otherwise survive if people had to decide which individual channels to pay for.
As a Cablevision customer, I haven’t been able to watch the Fox network since Oct. 16 when Fox pulled two local channels from the service in a pay dispute. I’m missing World Series baseball, the NFL on Fox and the drama series “House.” My wife is missing “Glee.”
On its website, Fox notes that TNT gets $1 per subscriber and spends about 80% less on programming than Fox. But then again Fox also distributes its programming for free over the air to households with terrestrial TV antennas. However, less than 10% of U.S. households rely on over-the-air antennas to get their programming, according to Nielsen.
Sports channel ESPN receives $4 to $5 per subscriber, but it’s only available through pay TV providers.
Cablevision subscribers pay an average of $149 per month including up to $18 for broadcast stations, according to My Fox New York. But Cablevision’s offer for Fox 5 and My9 amounts to less than a penny a day.
These types of disputes are becoming commonplace. Cablevision’s customers have been caught in the middle of four such programming disputes this year, the Associated Press reports.
That’s one reason I’d like to have a la carte programming choices. I don’t like the idea of watching only a handful of channels but paying for hundreds.
With over-the-top TV services like Netflix and Hulu, consumers are finding alternatives to rising cable bills. Plus, Apple’s new video rental service allows consumers to rent shows for 99 cents an episode.
Cable and other pay TV services will fight a la carte programming tooth and nail. That’s because if people had more choice in what specific channels they subscribed to, they’d probably end up spending less.

Oct. 30, 2010, update: Fox and Cablevision have reached an agreement and Fox programming is back on the air.

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