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.
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