Only 14% of Americans are satisfied with their pay-TV service; but the multi-billion-dollar entertainment industry clings to its extortionate model of forcing customers to pay for channels they don’t want…with the industry’s bosses desperately offering “spin” opposing customer choice.
A recent survey by worldwide consulting company PricewaterhouseCoopers of pay-TV subscribers found that only 14 percent are satisfied with the current pay-TV system, in which cable and satellite subscribers are forced to pay for a “bundle” of hundreds of channels, only a tiny number of which most customers watch. Even a basic cable subscription costs about $80 a month; with some premium channels, costs soar to $100 a month or more. The survey found that almost half of pay-TV customers want a totally a la carte system, in which they would pay for only those channels they actually watch; and 73% said they want a system that at least allows them more ability to customize the packages they now receive. PwC’s media expert Matthew Lieberman said that TV executives would be wise to note the popularity of the a la carte concept.
“With TV in such a state of flux, companies must revisit their business models…The winners will be those that offer custom services or curate content in the most appealing ways,” Lieberman said.
The recent “blackout” battle between Time Warner Cable and CBS has brought the issue to a critical point for many subscribers – because, after having their access to certain TV channels blocked (even though they are still being forced to pay for them), more and more Americans are seeing the logic in demanding Cable Choice.
This has sent entertainment industry bosses into panicked hysteria. Recently, Hollywood has attacked Senator John McCain’s Television Consumer Freedom Act; screeched that Cable Choice would “destroy TV’s Golden Age”; and tried to convince advertisers that allowing customers to pay only for the channels they want will drive up the price sponsors pay for commercials.
This is a lie, by the way. Certainly, prices for commercials could go up – IF THE ENTERTAINMENT INDUSTRY CHOSE TO RAISE THEM. The industry wouldn’t have to raise them, however. This is similar to the way the industry claims that, if people were able to buy channels ala carte, the price per channel would go up and customers would pay more per channel. This is only true if the entertainment industry chose to charge more per channel. If it wanted to, the industry could keep the price the same as it is now, and simply allow people to buy fewer channels. But if they did that, the industry’s profits would fall, since they’d no longer be getting billions of dollars a year for the hundreds of channels nobody wants.
The increasing popularity of Cable Choice among the public has led to an increasingly panicked but determined response from Hollywood. In the last few days, a phalanx of millionaire industry executives have appeared in the Hollywood trade press, alternately boasting and begging in their opposition to allowing customers the freedom to pay only for what they actually watch.
John Landgraf, president of the FX basic cable network, whined that Cable Choice is “a risk to the whole ecosystem” of television, and a threat to the creative process. (Let us guess – it would create a “chilling effect,” right, John?) Landgraf also claimed that allowing customers to pay only for the shows they actually watch would cause “the greatest recession in the history of Hollywood.” Gosh. You mean loudmouthed bullies like Kurt Sutter could no longer make millions of dollars by forcing everyone to fund his ultra-violent trash? What a pity THAT would be!
But Landgraf was right about one thing. When he said the cable’s current system of bundling extortion was “a really efficient economic model,” he was right: it certainly IS “efficient” – especially if your name is John Landgraf. The cable boss recently split the single FX network into three networks – FX (for ultra-violent dramas), FXX (for gross-out comedies), and FX Movie Channel. So now, instead of forcing consumers to pay for ONE basic cable network with disgusting content, he’s forcing everyone to pay for THREE of them. An “efficient economic model” indeed – especially if you’re FX.
Meanwhile, Philippe Dauman, CEO of Viacom (the pay-TV giant that owns Nickelodeon, MTV, their spin-off networks, Comedy Central, BET, CMT, Spike, TV Land, VH1, and others) claimed that an “a la carte world is not good for consumers.” (Because when you make $33 MILLION a year like Dauman, you know exactly what’s best for low-income consumers.) However, Dauman refused to discuss cable company Cablevision’s lawsuit against Viacom. Cablevision sued Viacom because cable companies are forced to pay for a growing number of small, unpopular channels most people don’t watch, just to get access to the few channels people do want. Cable companies are forced to pass these costs on to irate customers, and understand how much the end users hate paying for something they never use …which is why many cable company bosses favor Cable Choice.
Along with Viacom big shot Dauman and Fox flunky Landgraf, Disney’s top boss also got into the act. Robert Iger, CEO of all Disney/ABC/ESPN properties, told The Hollywood Reporter that the current bundling system was “a really good bargain,” claiming that “the consumer is getting a good deal” paying $75 per month for the eight channels they actually watch. And ESPN president John Skipper echoed his boss, stating that the bundle is “the best value in entertainment.” (Skipper also took a moment to mock Senator McCain’s bill, sneering that “[The Senate is] struggling to just keep the government running right now.” What a class act.)
Of the Big Four entertainment industry conglomerates, only a spokesman from Comcast-NBCUniversal didn’t weigh in; although in one way, that industry giant made an even more profound statement of just how little they care about consumers. Comcast announced the president of their new Esquire Network. This is yet another example of a tiny cable network nobody asked for, wanted, or will watch – but which is being added to the bundle, and which every cable customer will now be forced to pay for.
The real proof that Hollywood’s “ala carte will never work” is just empty rhetoric, though, is the undeniable fact that it DOES work. Channels like HBO and Showtime are not part of a basic “bundle”, and they survive – in fact they thrive, because there is a small but dedicated number of people who are willing to pay a premium price to get them. And an even better example is the NFL Network. This is a group of channels that are not part of any other bundle, just channels that show nothing but football. NFL Network is sold “ala carte,” and it is certainly making a handsome profit. And what about all those “pay-per-view” movie channels? They must turn a profit, or the industry wouldn’t offer them.
This week’s entire attack on the idea of Cable Choice has obviously been carefully orchestrated and coordinated by those within the entertainment industry – trotting out their top dogs to try to convince the Hollywood trade press, the advertising industry, major sponsors, and the government that cheating millions of Americans is “good for business.” Obviously, it’s not for nothing that the National Cable and Telecommunications Association spends the most money lobbying Congress; in the second quarter of this year alone, the NCTA spent almost $5 million on “persuading” Congress…more than double what the American Petroleum Institute spent. The next time political pundits complain about the vast influence of bankers and oil companies, they should remember who is #1 at pumping money into swaying Congress: the entertainment industry.