What’s CBS worth? How about just the programs?

In MediaPost‘s TV Watch, West Coast Editor Wayne Friedman asks, Trick Question: What Would You Pay For Access To CBS For A Month? Here’s my  (lightly edited) answer from the comments below the post:

This is interesting. We have always been consumers of TV channels more than customers of them. First they were free over the air. Then we paid cable for access to over-the-air channels. Then, once cable-only channels came along, we had bundles that masked actual costs. Then we had premium channels that cost an extra $12 or so per month. In the midst of all that the cable companies turned into retailers of bundled channels they bought wholesale. I gather from the news that CBS raising its wholesale price caused Time Warner Cable to opt out of carrying it.

So, if we look at TWC’s NYC basic bundle channels, we see 61 channels, most of which are packing material. The price is $80/mo. There are 8 channels, including CBS, in the first 13. These are your top channels. Among them, the leading brands are the original occupants of those over-the-air channels (2,4,5,7,9,11,13). Of those the ones that matter are 2 (CBS), 4 (NBC), 5 (FOX), 7 (ABC), 11 (CW) and 13 (PBS). This is also Aereo’s main lineup. Aereo is today’s CATV (community antenna TV, the ancestor of cable). Here in NYC, its bottom price, including CBS, is $8/month. Let’s say CBS, as #1, is worth somewhat more than the rest. We would come up with a price between, say, $2 per month and the full $8 just for customers who want CBS and can’t get it from Time Warner Cable. That’s what people would, and do, pay.

(Note that here in NYC, the new digital signals tend to work only if you can see the Empire State Building. If your apartment windows look elsewhere, good luck with the rabbit ears. Because of this fact, Aereo has a substantial market.)

Here are Wayne’s bottom lines:

While Time Warner says it’s thinking about not profiting from CBS, another senior executive at a big cable operator, Cablevision Systems, is thinking about the day cable operators might not carry TV programmers/networks as part of their product/service line.

James Dolan, president/CEO of Cablevision, noticing how much time he and his children and are using the likes of Netflix — via broaband — for their TV consumption.

Perhaps future generations won’t need TV networks, he says. Not just broadcast, but perhaps cable networks as well. Good news for TV networks, then, in this regard: No more discussions and fears about a la carte programming.

Discussions, yes; fears, no. Because if we go full á la carte, we need to come up with prices for programs.

The phone companies already meter usage, especially for mobile customers. The cable companies are less built for that than the phone companies, but at least keep track of data use. So why not just come up with a pricing scheme for programs? Customers would pay for what they use.

I think that’s where TV is likely to end up, whether it’s over cable or over the top of it on the Net.

2 comments

  1. PJ’s avatar

    Agreed. I’d happily pay for the 3 shows i care about, if there was a reasonably priced way to see them. Hint: 1/23rd (if thats how many episodes per season) of the price of the DVD set is *not* reasonable for a one-time viewing – because for that I could wait and buy the DVD set.

    Alternately, I wouldn’t mind subscribing to ‘CBS’ if it were like netflix: a big catalog of stuff I could watch on-demand, sans commercials. But I think the TV execs are too addicted to advertising money to make that happen. Heck, I’m not sure enough about who actually owns the rights to the shows to know if that’s even possible. Maybe networks will be replaced by studios who push their stuff directly to their subscription platform ? If there was an open-source netflix-like platform with a simple ‘insert content here’ ?

    As usual, I just want the end game to get here sooner.

    (For the record, while I haven’t paid for cable TV in almost a decade, cable internet has always had the best broadband available, so that’s what I use. Netflix and a DLNA server with my ripped DVDs keep the kids happy.)

  2. Doc Searls’s avatar

    Agreed, PJ.

    The market (that’s you and me) likes á la carte. The cartel (Cable + Hollywood) likes the vertical control they have now, from production at the top, on down to the theaters and set top boxes at the bottom. They also like the protection they get from captive regulators. Within that system, they can overcharge for advertising on the B2B side and for access to programming on the B2C side. This is why they hate the Net, and call it “over the top” or OTT. It’s outside their control. That most of us have access to the Net over cable’s plumbing is the height of irony — until they realize that there’s more money to be made in the open market than the closed one. Bonus link.

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