As we reported yesterday, Cablevision recently filed a lawsuit against Viacom, only a few months after signing a new carriage agreement with them. Commenting on the lawsuit, CEO Jim Dolan called Viacom’s bundling practices:
“….an abuse of its market power and a violation of federal antitrust laws.” It “causes prices to rise and we believe it needs to be stopped.”
Well, we might agree, except apparently Cablevision has been having its own issues with conspiratorial cartels charging unreasonable fees. They tacked on a $2.98 surcharge to all cable bills for sports programming last spring, bringing the total cost per month directly attributable to sports programming to almost $10, or over double what is being paid for Viacom’s lineup. The 14 channels that Cablevision is looking to dump have a combined cost at wholesale of about $1 per month, so even in the best case scenario, it’s doubtful that any customer would see an appreciable reduction in their bills if they were ditched.
So why not simply break the Viacaom bundle up, offer the channels for $5 a month to those who want them, and allow non-sports-watching viewers to opt out of sports channels for -$10 a month. Time Warner and other providers have introduced sports-less packages, so it’s not unheard of.
I speculate that the issue at hand has a lot more to do with reduction of bandwidth consumption on the pipe. Cablevision is fiber-optic cable system, but the “last mile” is still all copper, and there’s a limit to how much they can carry at once (especially with ever increasing internet traffic added on). It’s a lot cheaper to sue Viacom than it is to construct a new network. The 14 channels that Cablevision is looking to dump aren’t that expensive in terms of fees, but they do eat up space that could be used for more profitable bandwidth. Cablevision is biggest in many areas affected by Hurricane Sandy, so I’d estimate a lot of their network expansion money went to the repair, and not to new shiny infrastructure.
Several requests for comment on this story to Cablevision went unanswered at press time, though, so we don’t have any official word on the reasoning.
But with the price of sports programming approaching the level of buying HBO, isn’t it time to make athletics a premium channel package and be done with it? Given the level of interest in such programming, and the low uptake of ESPN-less cable packages, how much money do you really think this would cost them? They could even one-up HBO and charge a huge premium to buy just the sports channels, and arrange to stream them over the internet. One of the massive benefits of digital cable is that they can literally turn off or on every channel individually, so why not take advantage of it? You could have a liberal package that includes MSNBC, Bravo, and Logo, but blocks Fox News; an Educational package that bundles Discovery, National Geo, History, and subsidiaries (well…TLC cut out any and all valuable Learning a long time ago), but blocks Fox News. Heck, I bet they could get people to buy three-quarters of what they do now and still feel good about it without even trying, instead of watching customers cut the cord by the tens of thousands
There’s no question that the mass bundling of channels is going to undergo a bloody, nasty evolution in the next five years or so, but it remains to be seen whether the net positives outweigh the negatives. I’m OK with paying $2.99 a month for Comedy Central with two channels I don’t want tacked on. But I’d really rather not pay a penny for sports I’ll never watch.