Let’s see what’s on
daytime TV in a small
market. The $100-plus
cable package includes
dated movies, histrionic pundits, weather,
shopping, assorted sitcom marathons and the
members of ZZ Top hunting alligators. If cable
companies are being bled dry by networks, I
I see 600 channels of direct-buy and local
advertising interspersed with reality and
recycled programming. With 110,000 cable
homes paying, say, $60, the cable provider
is making $6.6 million a month in subscriber
fees only. Based on industry data, advertising
brings in about 30 percent of total revenues,
which would make this nearly a $10 million
market. Published figures suggests content
costs around a third of that, which admittedly
seems steep. Cable’s response is to lobby the
smithereens out of the FCC and Congress for
There are a couple of pitfalls in doing so.
First, without programming, cable is nothing.
Broadband, maybe, but phone service?
Skype. People buy cable for TV shows.
The second problem is that it highlights
the obsolescence of the business model.
While industry lobbyists rend their garments
in D.C. over program fees, I’ll be dropping
this cable package because I won’t pay for 590 channels I don’t watch. I’m sure I’m not
alone. Certainly short of a la carte, providers
could offer a greater variety of smaller tiers
for less. That might mean a flat quarter or
two, however, and that’s intolerable in today’s
markets. So cable will cling to its overbloated
program packages even as it chases
subscribers to satellite and the Internet.
By then, option-endowed chief executives
and institutional investors will have sucked
as much value as they possibly can out of the
industry and leave it heaving as DirecDish and
Comcasterizon duke out what’s left of pay TV
provision. The rate regulation argument is just
a screen for wringing as much money out of
subscribers for as long as possible.