Migrated from ESPN.com blog February 2, 2011
Originally published May 7, 2008
To say that I am displeased with the current state of cable television is an understatement.
According to a report by the Consumer Federation of America, “Approximately 40% of the top channels (measured by subscription or prime time ratings), which command the highest prices, are owned in whole or in part by cable operators or companies that have large ownership stakes in cable companies.”
**Actually, for my sanity’s sake, and the fact that this is a blog, and not in any way a scholarly paper, please take note that any statistics/facts I reference have come from the above mentioned report.**
Cable companies have continually argued that the reason for price increases is two-fold. One, that the cost of programming has gone up, and two, that they need increased profit margins to put system upgrades in place. With little research, these arguments are quickly shot down. In answer to the first argument, the expensive channels are largely those owned by the cable companies (thus they’re profiting from them anyway). If cost were truly the reason for price increases, their profit margins would not be rising so rapidly. Operating revenue increased 30% per subscriber between 1997 and 2001. I somehow don’t believe that the cost of programming has “forced” cable companies to raise prices by an average margin of close to $10 per subscriber per month (and that was as of 2001–it has continued to rise).
Returning to the fact that 40% of these expensive channels are owned by the cable companies, we realize that the money is going directly back into their pockets. As long as they continue to monopolize and force out other providers, (like satellite–which has had the FCC refuse any mergers that might give them any hope of competing with cable), there will be no such thing as competitive pricing.
The truth is that it would cost those cable companies 2 cents per subscriber per day to offer the NFL Network on a basic cable package. They refuse to do this because NFLN is an independent channel (not owned by them) and so the money doesn’t immediately come back to them. It’s much better to line their pockets with profits from offering less popular (yet more expensive) channels like Golf and Versus in the basic package. You may never watch them (or maybe you do, I have nothing against golf), but you’ll certainly pay through the nose for them.
The FCC must be compeled to allow new competition into the market via satellite and wireless providers. They have to stop allowing cable companies to monopolize multi-unit dwellings in order to facilitate fair competition. Finally, they need to put in place better nondiscrimination rules to keep cable companies from stifling independent networks or relegating them to “special packages” only.
In the past several years, my cable bill increased from approximately $50/month to somewhere in the neighborhood of $90/month. It was at that point that I could no longer justify paying for it. Do I miss ESPN and NFL Network? Of course I do.
But until there are some regulations in place to benefit consumers and independent networks, the bar or an internet game tracker will have to do.