A number of cable operators are seriously considering implementing some sort of “a la carte” option for customers. It is way too soon to say whether they will actually move forward with the plan, or whether it would let users choose individual channels or some sort of customized bundle. Nonetheless, the news is startling in that MSOs and networks have long argued that bundling is the best model for buying TV.
But executives now say the change is a necessary response to shifting dynamics such as higher carriage costs and using the Web to watch programs, as well as a weak economic recovery that has forced many consumers to cancel cable television subscriptions.
Networks like ESPN, which charges upwards of $4 per subscriber per month, are cited as driving up the cost of the basic cable package.
“We feel that some of those expensive channels should be offered a la carte so only those people who want to watch them actually pay for them,” said Jerry Kent, chief executive of Suddenlink, which has 1.3 million cable customers.
Among TV news channels, Fox News has the highest carriage fee at $0.58 according to SNL Kagan, and is angling for even more carriage cash as new deals come up. Any sort of a la carte option could strike a blow to many smaller channels, such as Fox Business or Bloomberg, which may not be able to sustain themselves on the number of subscribers that would actually “buy in.” Major media companies such as News Corp. and NBC Universal vociferously oppose all a la carte measures, knowing that essentially all of their channels could be adversely affected.
Rather than simply letting consumers choose only the channels they want, some sort of hybrid model–which leaves off expensive channels such as ESPN, Fox News and TNT, could emerge as an option.