Media

Why Cablevision wants à la carte TV pricing for itself, not you

TV

Christopher Kaminski is the founder and CEO of Deluxis.

Cablevision is suing Viacom because Viacom is allegedly forcing Cablevision to buy channels it doesn’t want. But that doesn’t mean the company is working hard to lower your monthly bill, or even help lessen the number of unwanted channels you have access to.

In fact, Cablevision probably wants to continue forcing their customers to buy channels they don’t want. Allow me to explain why.

Here’s a little inside baseball on the television industry. Both cable companies and big media companies enjoy selling bundles because it provides a stable revenue stream. Content bundles can serve as a hedge against the dip in ratings of one channel, and help defray the risk of launching new channels. It’s the same basic theory that governs why investors have portfolios of investments, and why your mother told you not to put all your eggs in one basket.

If Cablevision were to prevail in this case, it is very likely that nothing positive would happen for the cable customer. Cablevision is not going to stop carrying Nickelodeon or MTV. They are only concerned about “niche” channels like Nicktoons and MTV Tr3s. A ruling in favor of Cablevision means people who actually watch these smaller channels would lose access to them, while the people who don’t tune in would probably not see a smaller monthly bill.

These smaller channels cost about $0.02 each per subscriber every month. Even a dozen of these little channels would add up to about one shiny quarter. That kind of savings would probably go unnoticed on a cable bill that now averages $86 per month. Of course that assumes that Cablevision would even pass the cost reduction to their customer. And any kind of cost reduction assumes that Viacom wouldn’t raise the price of Nickelodeon to offset the loss of Nicktoons.

Cablevision, like any cable or satellite company, is very unlikely to ever offer their customers the ability to pick and choose individual channels. Doing so would require millions of dollars in capital expenditure to upgrade the software on set-top boxes, re-engineering their billing system, and other associated infrastructure improvements.

And what would be their reward for all that hard work? Customers could pay them less money every month. A la carte could result in a lower and more unstable revenue stream for these companies. It seems extremely unlikely that anyone at Cablevision (who wants to keep their job) would champion such a cause.

Original TV image art via Shutterstock

Christopher is the co-founder and CEO of Deluxis, a new online television service featuring individual channel subscriptions. He is also a producer whose works include award-winning video games such as Valkyria Chronicles and MadWorld. He contributed to games published by Sega, Activision, Disney, Konami, and Turner/Cartoon Network. He is an active member of the Producers Guild of America, and held a board member position in the Northwest Chapter. Christopher previously maintained transcontinental fiber optic networks and gathered technology intelligence for the phone company.