A la carte pricing would cut bickering over pay TV fees
Spats between big TV programmers and cable and satellite TV distributors would cease instantly if pay TV customers could choose their own channel lineups.
By David Lazarus, Los Angeles, Times
July 12, 2012, 4:11 p.m.Give TV viewers freedom to pick the channels they want to pay for
Once again, TV viewers encountered full-page ads in the newspaper this week declaring that a greedy cable or satellite company was denying people the right to watch their favorite shows.
The latest example of this increasingly familiar art form featured a picture of Comedy Central's Jon Stewart and Stephen Colbert. "What'll they take away next ... freedom?" the ad asked. "DirecTV is at it again. Rise up!"
Darn that DirecTV, dropping Comedy Central, Nickelodeon and other channels. Just as fellow satellite TV provider Dish Network has cheated customers out of watching "The Walking Dead" and "Breaking Bad" because it axed AMC Networks.
At least that's how the big programming companies want you to see it. The reality is that they're equally to blame for these disruptions by forcing fat packages of channels down the throats of distributors such as DirecTV, Dish and Time Warner Cable.
These endless spats among media behemoths would go away instantly if viewers had the ability to choose which channels they want to pay for. More on that in a moment.
You'd have to be especially eagle-eyed to spot who was behind this week's ads accusing DirecTV of hating TV freedom. It was in tiny print at the very bottom of the page:Viacom Inc.
Viacom owns popular channels Comedy Central, Nick and, as it says in the ad, MTV, BET, TV Land, VH1, Spike, CMT "and 18 more!"
It's that "18 more" that's the trick. Viacom doesn't identify them in its ad, but here are the other channels DirecTV subscribers are losing: Nick@Nite,Nick Jr., TeenNick, NickToons, VH1 Classic, Logo, Tr3s, Centric and Palladia, plus assorted feeds for East and West coast viewers.
Would your life be significantly different without them? Mine neither. Heck, I couldn't even tell you what's on Tr3s or Palladia. I didn't even know these channels existed.
Programmers have long maintained that such channel packages are the only way to maintain TV diversity. Sure, lots of people watch Disney-owned ESPN. But if Disney didn't force cable and satellite companies to also air the likes of the Military History Channel, people would be denied the full gamut of viewing choices.
It's a bogus argument. What programmers are basically saying is that demand for these niche channels is so meager, they need to be underwritten by people who watch more popular fare.
That's kind of like the publishing house Scholastic Inc.making readers of the "Harry Potter" series also buy copies of "The Accidental Cheerleader" to ensure diversity of literature for young people.
DirecTV says Viacom is seeking a 30% hike in annual fees for its channels, or an extra $1 billion over about five years. Viacom says it just wants fair market value for its shows.
"Viacom is asking DirecTV for a rate increase of a couple pennies per day, per subscriber," Mark Jafar, a company spokesman, said on a Viacom blog. "It's a good, fair deal."
But Derek Chang, DirecTV's executive vice president of content, told me that Viacom is seeking too much. "The ratings for many of their networks are down and a lot of their programming can be seen for free online," he said.
I say: Enough already.
These pie fights between overfed media conglomerates have become too commonplace. The perennial problem would disappear if cable and satellite subscribers could simply pick the channels they want to watch.
This is known in the TV trade as a la carte pricing, and it scares the bejeebers out of everyone in the business because it would entail a wholesale reinvention of how the industry operates.
Viacom and other programmers would no longer be able to rake in huge fees for bloated channel packages, just as DirecTV and other distributors would no longer be able to soak customers with sky-high fees for programming bundles that may include hundreds of channels no one ever watches.
However, DirecTV's Chang said the company would be open to a la carte if it could get programmers to play ball, which probably won't happen any time soon.
Here's the dirty little secret of the pay TV biz: According to Nielsen, the typical viewer watches only about 17 channels on a regular basis.
That's why a la carte is the only fair way of charging people for this product. People would put together their own channel lineups and pay a monthly fee for each selection. Costs might range from a few bucks for ESPN to as little as 25 cents for a classic-movie channel.
The marketplace would decide which channels sink or swim, not some phony-baloney commitment to TV affirmative action.
Canadian TV viewers are now getting a chance to try an a la carte system, thanks to an edict from that country's broadcast regulator. So why not us?
I put that question to the Federal Communications Commission. Specifically, I asked where Chairman Julius Genachowski, an appointee of President Obama, stands on the issue.
His predecessor, Kevin Martin, appointed by former PresidentGeorge W. Bush, had declared his support for a la carte, though he didn't do anything to follow up, such as calling on Congress to prohibit pay TV companies from charging customers for channels they don't want.
A spokesman for Genachowski had this to say: No comment.
Until we get a la carte pricing, the feuds between TV programmers and distributors will continue, and viewers will keep being told to accept the loss of favorite shows until the bickering is resolved. They'll also continue being charged for channels they never watch.
It's our money. We should be able to spend it as we please.
And our free-market friends in Washington should be fully behind such a sentiment.
David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5. Send your tips or feedback to email@example.com
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