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Rate increases coming, could be worse


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133 replies to this topic

#76 OFFLINE   TBoneit

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Posted 14 September 2012 - 01:22 PM

I am hopeful that the rates rise to the point where there will be mass defections from all cable/satellite providers and then the rates will fall. It is ridiculous that rates rise far higher than inflation every year and it's all because of no a la carte.


1. If there were mass defections rates could not fall. The amount paid to the channels is by contract.

2. Price per channel would be much higher with A La Carte. No savings there unless you only wanted 2 channels.
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#77 OFFLINE   goinsleeper

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Posted 14 September 2012 - 01:54 PM

HBO shows that you can be a la carte and successful.


HBO and sports are not even remotely comparable in this manner. If you live in New York and like the Yankees, chances are you'll see them on local or regional programming. Another large portion of revenue is tickets sold for fans to sit at the game. The more people you allow to watch the game at home, the less money the team makes from tickets. Eventually even the hot dog vendors lose their jobs.

Now take HBO. They have contracts with studios and do not pay for the creation of 99% of the programming you see. They have costs for their own investments and they do pay the studios for the rights to show their movies but they do not pay the $x millions directly for the filming of those movies.

HBO is also not governed by the FCC is the same manor as regional sports. The reason for any sports subscription is the ability to get around the FCC. Being on the west coast and wanting to watch an east coast team creates problems with basic programming. Being able to pay for a subscription directly for MLB, NBA, NFL, NHL... is the work-around and is basically the al a carte that you are refering to.

The overall difference here is HBO is one type of programming(for the most part), movies and original series. Sports is much more vast. What part of the country are you in? What type of sports are you looking for? Is it college, pro or high school? Do you need to pay for the channel or is it on a local affiliate? Even if you pay for the Sunday Ticket, if a game is being shown on your local or regional channel it will be blacked out on the NFL package. This is so the game can be sold twice, once to a channel holder and again to the nation.

#78 OFFLINE   Diana C

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Posted 14 September 2012 - 04:33 PM

...This is so the game can be sold twice, once to a channel holder and again to the nation.


Not quite...the game is not being sold, you are. The real business of broadcast television (any channel that runs advertising) is the sale of viewers to advertisers. Your are not the customer, your are the product.

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#79 OFFLINE   goinsleeper

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Posted 14 September 2012 - 04:40 PM

Not quite...the game is not being sold, you are. The real business of broadcast television (any channel that runs advertising) is the sale of viewers to advertisers. Your are not the customer, your are the product.


Are you differentiating between local affiliate and RSN? Otherwise agreed with the side note that the rights are still sold with the idea of making the money back and then some with advertising costs. If you buy the rights to show a game, your advertising goes up for that selected time. The Superbowl being the obvious example.

#80 OFFLINE   Diana C

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Posted 14 September 2012 - 05:45 PM

Ok, I'll bite - keep these channels and get rid of the rest!:lol:


Ok, here we go:

Channel                Number of viewers     Monthly Revenue    a la carte Price
                          (millions)           (millions)       (revenue neutral)
====================   ===================   =================  =================
1. USA                 3.165                 $ 48.4              $ 15.30
2. Disney Channel      2.647                   87.1                32.90
3. ESPN                2.342                  405.9               172.90
4. TNT                 2.232                   99.0                44.30
5. History             1.987                   18.7                 9.40
6. Fox News            1.883                   59.2                31.50
7. TBS                 1.614                   48.5                30.00
8. A&E                 1.561                   15.0                 9.60
9. FX                  1.532                   40.3                26.30
10. ABC Family         1.462                   18.1                12.40
11. Nick At Nite       1.344                   44.9                33.40
12. SyFy               1.330                   20.6                15.50
13. Discovery          1.288                   24.3                18.90
14. Adult Swim         1.237                   16.8                13.60
15. HGTV               1.205                   13.7                11.40
16. MTV                1.189                   27.1                22.80
17. AMC                1.182                   22.3                18.90
18. Food Network       1.177                    7.9                 6.70
19. Comedy Central     1.006                   13.7                13.60
20. Bravo              0.926                   16.7                18.00
                                                                 =========
                                                      Total:      557.40

The current Monthly Revenue is calculated using the number of households in which the channel is available (as stated on the channel's website) and the 2009 per subscriber costs (so current revenue is undoubtedly higher now). The a la carte monthly price is rounded to the nearest 10 cents. The AMC numbers do not take into account the loss of Dish Network viewers.

Obviously, with only 20 channels, the number of viewers for each channel would probably go up. But even if the montly a la carte costs were 25% of the above values, many subscribers would not save much, if any money, at the cost of over 150 channels.

This idea that a la carte pricing would lower costs is based upon the mistaken assumption that the per subscriber cost would remain what it is today under the current tier model. A la carte pricing simply won't work the way its advocates think it will.

Edited by Diana C, 14 September 2012 - 05:54 PM.

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#81 OFFLINE   Diana C

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Posted 14 September 2012 - 05:48 PM

Are you differentiating between local affiliate and RSN? Otherwise agreed with the side note that the rights are still sold with the idea of making the money back and then some with advertising costs. If you buy the rights to show a game, your advertising goes up for that selected time. The Superbowl being the obvious example.


All I was saying is that the game is not being sold twice because it isn't being sold at all. The viewers are being sold...the local viewers to the local advertisers, the national viewers to the national advertisers.

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#82 OFFLINE   RD in Fla

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Posted 14 September 2012 - 07:28 PM

Those doubting the sustainability of ESPN need to read this article.
http://www.businessw...aoxian (Maoxian)

#83 OFFLINE   Mike Greer

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Posted 14 September 2012 - 10:42 PM

Ok, here we go:

Obviously, with only 20 channels, the number of viewers for each channel would probably go up. But even if the montly a la carte costs were 25% of the above values, many subscribers would not save much, if any money, at the cost of over 150 channels.

This idea that a la carte pricing would lower costs is based upon the mistaken assumption that the per subscriber cost would remain what it is today under the current tier model. A la carte pricing simply won't work the way its advocates think it will.


But.... You're assuming that the viewers of the channels that went away would just go away. I don't think that's the case. How many viewers were around when there was only 3 or 4 channels to watch? But it doesn't really matter.... Something will have to change. People seem to be getting closer and closer saying ‘screw it!’….

I can afford to pay $200 or $300 a month for TV but I won’t do it. I’ll go back to broadcast TV with a Tivo before I hit $200 and I don’t think I’m alone.

#84 OFFLINE   Diana C

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Posted 15 September 2012 - 05:53 AM

But.... You're assuming that the viewers of the channels that went away would just go away. I don't think that's the case. How many viewers were around when there was only 3 or 4 channels to watch? But it doesn't really matter.... Something will have to change. People seem to be getting closer and closer saying ‘screw it!’….

I can afford to pay $200 or $300 a month for TV but I won’t do it. I’ll go back to broadcast TV with a Tivo before I hit $200 and I don’t think I’m alone.


No, as I said, the viewership for each of the remaining channels would go up. But even if each viewer subscribed to, say, half of the remaining channels, they would end up costing about $40 to $50 once you add in the distributor's margin (remember these are the costs to the cable and satellite operators...your cost would be somewhat higher).

$40 for 10 or so channels...show how that's better than what we have now.

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#85 OFFLINE   crkeehn

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Posted 15 September 2012 - 08:07 AM

Originally Posted by Titan25
Here are the top 20 cable channels for 2011, based upon total primetime viewers:


Code:
Channel Millions of viewers
1. USA 3.165
2. Disney Channel 2.647
3. ESPN 2.342
4. TNT 2.232
5. History 1.987
6. Fox News 1.883
7. TBS 1.614
8. A&E 1.561
9. FX 1.532
10. ABC Family 1.462
11. Nick At Nite 1.344
12. SyFy 1.330
13. Discovery 1.288
14. Adult Swim 1.237
15. HGTV 1.205
16. MTV 1.189
17. AMC 1.182
18. Food Network 1.177
19. Comedy Central 1.006
20. Bravo 0.926If you favorite channel is not on this list, it might not survive in an a la carte world.

Ok, I'll bite - keep these channels and get rid of the rest!:lol:


What?????
No BBCA??????
What will I do for My Top Gear and Graham Norton fixes?

Sorry for the awkward post, couldn't get multi-quote to work.

#86 OFFLINE   Satelliteracer

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Posted 15 September 2012 - 08:19 AM

Those doubting the sustainability of ESPN need to read this article.
http://www.businessw...aoxian (Maoxian)


I have many a friend and colleague that work there. They aren't going anywhere. They are the 800lb gorilla and they know it.
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#87 OFFLINE   Satelliteracer

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Posted 15 September 2012 - 08:20 AM

But what if all providers stood up to these high priced sports channels and said enough is enough, sports needs its own package, wouldn't that help the cause? Movie stars have high salaries too, yet movie channels can be put together in their own package.

The true sports fans are willing to pay to get their sports. I know I would pay more to get the Pac 12 Network, as well as many others on here.


Thing is, they won't and everyone knows it. You can't work together, that's collusion and illegal. As soon as someone stands up, another one goes for a short term win and signs them up to try and lure customers away from the one that doesn't have it.
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#88 OFFLINE   Satelliteracer

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Posted 15 September 2012 - 08:27 AM

Wait a minute, SR. Maybe I need a third cup of coffee but aren't you arguing for two completely contradictory positions? What is it? Should sports channels like the PAC 12 be a separate tiered package? That's what the article you linked to seems to say DirecTV's position is. Or are they part of the base package? You seem to be telling TheRatPatrol that must be the case.

Please tell me what I'm missing here.


Not at all. I talking about what is desired and what is reality. I'm showing that many customers who don't like sports want it to be tiered. Fair point. D* tries to do that with Pac 12 and what happens? Those that don't care about cost want it no matter what. Again, puts a distributor in a very difficult position. Trying to manage insane cost increases, mostly at the hands of sports, while also delivering a product that SOME people (very passionate) want without impacting everyone.

Very difficult. My point with HBO is that you simply will not see sports in a HBO time a la carte format any time soon, in my opinion. Despite the fact the distributors would love to see that happen to control costs and despite the fact many customers would love to see that, the economics won't allow for it.

The sports channels are often backing into a number based on over reaching on what they promised the team and\or league. Let's take the Lakers channel for example. They grossly overpaid for that product for the next 20 years. Now they have to monetize it across all these distributors. Everyone has to pay a ton of money to make them whole so they can make the Lakers whole. If that channel was only on a sports tier or a la carte as the poster suggested, the channel would be about $50 a month for that one channel in order for TWC to deliver the same revenue to the Lakers. That is because the number of people truly interested in the channel is far far far less than the required distribution the network needs. That's why I say that the HBO model won't work there. It's hard enough to get sports channels into a sports tier (ironic statement, don't you think), but putting them solely a la carte I don't see happening due to the economics at work.
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#89 OFFLINE   Carl Spock

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Posted 15 September 2012 - 10:25 AM

Satelliteracer, I really appreciate your replies and participation. Thumbs up to you! :righton: :)

The service providers are in a bad position. I certainly wouldn't want to be DirecTV in a fragmenting market.

It would be interesting if someone would try a premium subscription for a limited market channel. But then, I bet the market research has been taken and there just wouldn't be enough subscribers to make this work. You'd need a broader base to support the network. I could see a sports pack consisting of all of these college sports channels popping up. That I would buy. If the package was diverse enough to be a nationwide draw, including people who are simply fans of college sports and not just the alumni of a particular conference, maybe it would work.

Edited by Carl Spock, 15 September 2012 - 11:01 AM.

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#90 OFFLINE   Diana C

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Posted 15 September 2012 - 10:52 AM

Satelliteracer is exactly correct. Just look at the numbers for ESPN...if split off into a premium it would be prohibitively expensive - something around $200 per month for the subscriber. There are lots of reasons for this situation, from player salaries to league excesses to channel demands, but you can't unring the bell.

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#91 OFFLINE   tonyd79

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Posted 15 September 2012 - 11:24 AM

Again, I do agree - it just comes down to price. Obvisouly, at least for now, DirecTV is easier.. But for many of us it means paying $25+ per month per channel considering how few channels we watch.

Your milage may vary!


The average bill is around $100. You only watch 4 channels?????

If you do, you are a complete outlier.
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#92 OFFLINE   mreposter

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Posted 15 September 2012 - 03:12 PM

Not quite...the game is not being sold, you are. The real business of broadcast television (any channel that runs advertising) is the sale of viewers to advertisers. Your are not the customer, your are the product.


So, we're sort of like dairy cows - here to be milked... ?
Moooo
..........
.......... There are none so blind as those who can not see it in HD.
.......... Directv customer since January 2000.
..........

#93 OFFLINE   Laxguy

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Posted 15 September 2012 - 04:13 PM

So, we're sort of like dairy cows - here to be milked... ?
Moooo


Keee-rect! Cows to the left, sheeple to the right.... But at least we in CA are told our herds are happy herds! :sure:
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#94 OFFLINE   Mike Greer

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Posted 16 September 2012 - 07:16 PM

No, as I said, the viewership for each of the remaining channels would go up. But even if each viewer subscribed to, say, half of the remaining channels, they would end up costing about $40 to $50 once you add in the distributor's margin (remember these are the costs to the cable and satellite operators...your cost would be somewhat higher).

$40 for 10 or so channels...show how that's better than what we have now.


Even if the prices don't go down at least we could take the money wasted on channels that nearly no one wants and spend that on real programming...

I know what you're saying - I don't think it is quite as bad as you do but again... If something doesn't change there won't be as many subs 5 years from now....

#95 OFFLINE   Mike Greer

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Posted 16 September 2012 - 07:23 PM

The average bill is around $100. You only watch 4 channels?????

If you do, you are a complete outlier.


I'm not sure what you mean by 'a complete outlier' but 4 channels isn't too far off if you don't count my locals (that I don't need to pay for anyway) and showtime.

Discovery, SyFi, Comedy Central and History Channel are pretty much it. I guess I do watch ESPN once in a while but could live without it....

Bottom line - I pay way too much of the convenience of DirecTV...

#96 OFFLINE   Carl Spock

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Posted 16 September 2012 - 07:29 PM

Mike, I just think you are more honest than most about how few TV stations you actually watch. I know for me, 75% of my watching is from maybe half a dozen stations, and that includes my locals.

We want the smorgasbord, and will occasionally grab a plate of food that we rarely eat, but most of the time we feed from the same basic food groups.
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#97 OFFLINE   sigma1914

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Posted 16 September 2012 - 07:39 PM

Mike, I just think you are more honest than most about how few TV stations you actually watch. I know for me, 75% of my watching is from maybe half a dozen stations, and that includes my locals.

We want the smorgasbord, and will occasionally grab a plate of food that we rarely eat, but most of the time we feed from the same basic food groups.


We should have a poll. :) I just counted, and I watch 35 basic cable channels...HBO, Showtime, Starz,...random RSNs for sports packages...and 6 networks.
If you stop responding to them or put them on ignore, then eventually they'll go away.

#98 OFFLINE   spartanstew

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Posted 16 September 2012 - 08:47 PM

Mike, I just think you are more honest than most about how few TV stations you actually watch. I know for me, 75% of my watching is from maybe half a dozen stations, and that includes my locals.

We want the smorgasbord, and will occasionally grab a plate of food that we rarely eat, but most of the time we feed from the same basic food groups.


My favorites list only has 22 Channels. Of those, 90% of my viewing is on 10 channels (ABC, CBS, NBC, Fox, ESPN, TBS, TNT, USA, HBO, SHO)

I'm sure Directv can't wait to get their hands on your unit.

 
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#99 OFFLINE   PrinceLH

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Posted 16 September 2012 - 10:18 PM

I only watch consistantly:

FOX News
AMC
NBCS
Regional Sports Channel
My CBS Affiliate
TV Land
Hallmark
The Weather Channel
Palladium
MGM

If I could just have these, for $20.00 a month, I'd drop the rest!

#100 OFFLINE   davidpo

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Posted 17 September 2012 - 01:56 AM

I'd say in another 10 yrs ,if the current trend of rate increases continues or increases. I would not be surprised to see a mass exdous of subscribers,and the providers will just have to lower their prices or go poof. When the avg bill goes over $100 or higher there will be alot of people going back to ota. Same goes for ticket prices to sporting events at some point people will stop going especially, if the economy keeps going down the tubes.

Then again humans are a dumb lot sometimes,and some just amaze me. I know as far as I'm concerned once the bill hits over $100. I will be going back to 4 channels and netflix or something.




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