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To: Harmless Teddy Bear; All

Here's some dirty little secrets about the cable industry you may not know:

1) Cable pricing is set mostly by a few 800-pound gorillas like ESPN/Disney. Let's say ESPN wants broad carriage of their new "ESPN U" channel. At the next time their contract with a company is up, they tell the cable system that they can carry ESPN, ESPN2, ESPN News, ESPN Classic, ESPN Deportes, ESPN GamePlan and ESPNU for $15 per subscriber. If the cable system says "we want ESPN and ESPN2 but not the others", ESPN will say "Fine, that will be $25 per subscriber." Placement of the "junk" channels is part of ESPNs way of gaining greater visibility and squeezing the competition for available channel space which they can then turn around and sell more ad time to their advertisers saying the ad will reach more homes.

2) The shopping channels (QVC, etc.) actually PAY to be carried. It cuts the cost of your cable bill.

3) Some religious channels offer their programming free of charge. Their belief is that reaching people for God is more important than turning a profit.

4) A true a-la-carte system would cause prices to go up because advertising rates would go down (less potential eyeballs for each channel) so the cable customer would wind up paying a larger share for the rights fees and production costs of the products they watch. More events, especially sporting events, would probably go to pay-per-view as a result.

I think the best solution for both worlds is a-la-carte by interest group. You'd get a standard tier of the major channels plus some channels that are free or pay for access then additional add-on packages: sports, news, music video, music audio, family/children, classic movie, women's programming, science/discovery, spanish language, etc.

This would make for some unholy alliances. To get FNC, you'd also have to get CNN. To get CMT, you also have to get MTV, etc. But you could eliminate entire groups of channels that you have no interest in or don't wish to subsidize and probably see some savings based on that.


114 posted on 12/03/2005 9:03:22 AM PST by Tall_Texan (HOUSTON ASTROS - NATIONAL LEAGUE CHAMPIONS 2005)
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To: All

It should also be noted that a polling group surveyed people to set their own price for various cable channels as in "how much would you pay per month to get ESPN?" "CNN?" "HBO?" "Discovery?", etc.

It was determined that if customers set their own price, the total for the cable programming they get now on standard tier would go UP by 20%. Of course, not everyone would order *all* the channels but it was still interesting to note that most people actually value the overall cable package more than they think they do. It's just that they don't want to pay for channels they believe they don't watch.


122 posted on 12/03/2005 9:28:51 AM PST by Tall_Texan (HOUSTON ASTROS - NATIONAL LEAGUE CHAMPIONS 2005)
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