Apparently so, according to writer Derek Thompson’s well researched and engagingly presented, but unfortunately misguided, article about pay TV pricing (“Prisoners of Cable“) in the latest issue of my favorite magazine, The Atlantic. He acknowledges that the seven largest Big Media companies — including News Corp, Viacom, Disney, and Time Warner — “use their oligopolistic power” to give cable and satellite customers a simple choice: either buy “a bloated offering of channels at an arrestingly high price” or go without. “Cable’s proposition to consumers is simple: if you want the new, good, TV shows, you need the bundle.” That’s unfair, right? Not to Thompson. The system that makes people pay for channels they don’t want also gives us classy fare including HBO’s Game Of Thrones and AMC’s Mad Men and Breaking Bad. “Indeed,” Thompson says, “it’s no accident that as pay-TV has proliferated, and costs have risen, we’ve also entered a golden age of television.” And even though “as a monthly fee, cable feels like a rip-off…as hourly entertainment, it’s not.” The proof: The bundle only costs 20 cents an hour for the average four-person home that watches as much as four hours a day. The kicker: “more than 100 million households still think the price is worth paying.”
Boy, is that a stretch. Millions of TV addicts begrudgingly overpay for the cable bundle because they lack a realistic alternative. It’s no wonder that pay TV ranks third to last among the 47 industries tracked by the American Customer Satisfaction Index. Is it a bargain? Perhaps, if you’re in that average family. But not so much for a single person, a family that watches far less than four hours a day, anyone who doesn’t like sports (the most expensive programming) — and certainly not for those who are struggling to make ends meet. That’s a serious, and growing problem. While median incomes have declined 8.7% over the last 11 years, the inflation-adjusted cost of pay TV has risen about 87.1%, Bernstein Research’s Craig Moffett notes.
The biggest weakness in Thompson’s argument, though, is his suggestion that it’s OK for Big Media to insist that millions of people subsidize channels that they don’t watch because it has resulted in a golden age of television. The claim should trouble anyone who believes that television should be governed by market forces including consumers who are empowered to pick the channels they want. It’s possible that such a change would result in too little programming for kids, or minorities, or the cultural elite. But it might not, especially in a period when digital media are finding ways to accommodate all kinds of niche services. And if a market-based system didn’t support important programming, then it would be a lot fairer — and probably less expensive — to address the problem directly. We’re already discussing whether taxpayers should help to subsidize PBS and Big Bird. Why not also debate whether 100 million pay TV customers should be required to subsidize ESPN2 and The World Series of Poker?


Or subsidize auction or jewelry channels
It’s this kind of reasoning that had me cut the cord last year. My Roku (with Hulu Plus) and Netflix and the ocassional PPV are more than enough to keep me entertained. Yes, I miss some of the program choices, but I still have more than enough, and most things come out on DVD or other sources sooner rather than later, so I don’t really think I’m missing anything except an over-priced bill for the several channels I really wanted. I pay less than $20 a month for all the options I use, and I still don’t have enough time to keep up with stuff. I’ll never go back to cable or satellite.
I have Roku/Netflix too but also DVDs from Netflix and I can get everything I want between the two. Will take lomger but like you I cant keep up as it is, so it comes out the same in the end, only I pay much less this way.
Yeah yeah yeah…we don’t operate in a free market, we’re not living in a democracy, etc.
Great article. Their hubris will be there downfall. They think no one can stand going without. But we are getting mighty close. We discuss it monthly. We don’t watch sports, don’t get HBO and my guess is, within 2 years we won’t pay for cable beyond the most basic fee. And if that gets ridiculous we will cut that too. I hope they enjoy what they have now because it will change. Paying 120 or 160 a month is about the limit. Just like any industry media that thinks they are holding all the cards, this will change.
Here’s one household that’s opted out of the ripoff system. But I’m lucky that I don’t care about sports. very liberating. (Regardless, how about those Giants, huh?)
Unfortunately, we love our baseball, and to get out of market games on mlb.com and our home team’s channel, we have to have cable! We so want to cut that cord. If there is a way to pay to mlb and our home team directly, we would gladly do it. We feel trapped. What about the fans who can’t afford it?
MLB.tv is an app on X Box. You can subscribe there and watch all games.
Not if you want to watch your home team, which thanks to the stupid blackouts… “Home” team means the ones that’s 200 miles away.
Thanks. We tried, but we need the home team, as well.
I’m an Atlantic subscriber and the magazine is usually very good but I was taken aback by that article that sounded like a puff piece for the cable industry. I’m glad that others have noticed that too. Ironically, I’ve dropped cable as not being worthnthe expense, yet will continue to pay for The Atlantic, as long as they don’t make a habit of softball articles. (Granted, The Atlantic is much cheaper than cable.)
Went to a JHRTS panel on YouTube channels. Very tech savvy audience. Panel asked show of hands who had cut cable – only a handful. Most watch via DVR which is where cable will keep the convenience premium. Subsidizing programming has allowed cable to develop a number of hits – it’s the seed money that led to AMC, USA, and FX building line-ups that challenge the networks for live eyeballs. Viewers who want to go a la carte don’t realize the impact it’d have on variety in the cable landscape.
The cable industry is not a media industry, it’s an infrastructure. It costs money to build fiber to the home and then maintain that network. Your HD signal doesn’t magically appear out of the ether.
The assertion that there isn’t a choice is inane: The choice is to do without. No mature adult is so weak-willed as to be physically incapable of entertaining themselves with books and other diversions instead of television. The reality is that $0.20 per hour is a bargain for the quality of entertainment pay television offers. If you don’t feel it is worth that, then read a book, and stop looking for someone else to blame for not being able to pay whatever you want to for what you want.
Great commentary. I didn’t get the same sense that you did of what Thompson was saying, but both were fascinating reads.
I am a cord-cutter myself. And fine by it.
Better yet, why should 100 million pay TV customers — including ESPN2′s World Series of Poker fans, have to subsidize ESPN2′s outrageously overpriced parent channel, ESPN?
I’m sure Fox News will be decrying this socialism any minute now.
Exactly Brent.
Operators have high fixed costs (staffs providing installation and maintenance, equipment, service centers, etc.) — cutting the variable costs of affiliate fees for the low-viewership channels won’t allow for enough of a total discount that would provide a viable margin for them. A la carte pricing would make channels extremely expensive, and the total cable bill would come down some — not a lot. And yes, many channels would disappear. The system works.
Those of you who are considering cutting the cord — you do have options now, yes. But current shows like “The Walking Dead,” “Sons of Anarchy,” “Homeland,” etc., have few other legitimate distribution alternatives that would save you much money on the total bill. And yes… this is the golden age of television. Sure, you can save the equivalent of a halfway decent restaurant meal every month — decide for yourself whether it’s worth it.
I CAN REMEMBER 40 YRS + AGO i heard that some day you will have to pay for (TV). I thought noway, here i’am at 70 yrs old & paying for tv. basically i feel it’s reasonable intertainment, evan considering that in the 50s & early 60s, i could ride the bus go to the movies fox or united artists in inglewood california, there would be two movies, a news real, a cartoon or two for a dollar.My mother & father could get 6 kids out of the house on sunday. we had to walk to church, come home mom would give us each a dollar, that, would get the bus,movies & candy at sav-ons. With all that said, the bundle’s that the cable companies put together are way to padded. WHO in the F+U+C+K needs 250 channels?