LATEST CARRIAGE DISPUTE: FOX VS. DIRECTV

[LKellerIII]

All told, we probably watch 25 channels regularly, and another 25 during the course of a month. So if the providers or the cable company charged me only $2 per channel for those 50, I'd be paying about what I pay now for Comcast. If I was charged $3 per channel, I would be paying considerably more - with many fewer choices.

I don't see the upside.

The upside is for people like me who regularly watched only a few cable services (I counted 5 before realizing it was costing me $65/month for those 5 and pulled the plug).

So "a la carte" would be right for you, landtuna. But as I said in my post above, I think I'm more typical of the average modern TV viewer, who watches approximately 50 channels in the course of any month. At least it seems typical of my friends and acquaintances. And the ones who are sports fanatics watch even more channels.

So while "a la carte" might save a vew of you some money, for the rest of us, I think it would mean either higher prices, and elss selection.

Do I need the 200+ channels I get? Hardly - I don't even know what they all are....I could lose over 100 channels and not even notice. But having to pick and choose would be time consuming, and I'd probably end up paying more than I do now.

 

[LibertyNT]

Geeze for us in the DFW Metro we could lose 3 Locals over this.
I will be one of em, I have DirecTV.

KDFW FOX 4 (FOX O&O)
WFAA ABC 8 (Belo)
KDFI MY 27 (FOX O&O)

 

[vchimpanzee]

WCNC in Charlotte, NC. The former two are CBS Affiliates, and the latter 2 are affiliated with NBC.

I was going to post about this. I didn't know the full story.

In the digital TV era, this is ridiculous. Some people can't just switch to cable because they're out in the country or whatever, and even if they switched to Dish, who's to say they won't do something?

 

[vchimpanzee]

If their DirecTV bills go up.........consumers would save money in the long run by buying
a $25 antenna (to get locals).

Which costs hundreds to install unless it's indoor. And even then if you're out in the country, will it really work?

 

[mnradiofan]

This is one example where I feel that it's too bad we can't just cut out the middlemen and go directly to the content providers. Right now, it ends up making the cable and sat companies look bad for constantly raising rates, but if Fox came directly to me and said "we think you should pay double to continue to receive our channels" then they could get more direct feedback from the very people that they are ALSO trying to sell advertising to, plus it would put the choice in the hands of the consumers as to what channels they want to pay for.

I keep hearing that reasoning, but to me, it doesn't add up. If the content providers were providing the service directly to consumers, they would all have to put new customer service infrastructures into place in order to bill consumers, process payments, cut-off service to deliquent customers, etc. All this would cost them money. "Middlemen" exist for a reason - they can bundle services and provide customer service for combined providers at a lower cost per provider - and therefore a lower cost per consumer.

I also don't buy the argument that an "a la carte" system (customers paying for only the channels they want) would save money for most consumers. I know there are a few of you out there who are content with just the big 4 networks, and a few local indies. If that was my preference, I'd erect a big attenna on my roof and get everything OTA. But that's not me, and I think I'm a fairly typical 21st Century TV viewer. My wife keeps an eye on our investments by watching CNBC, we watch CNN for news at least a few times per week, I prefer the dramas provided by the basic cable networks (FX, TNT, AMC, etc.), but I still watch a few shows on each of the Big 4. There are a couple shows I watch regularly on BBC America, etc.

All told, we probably watch 25 channels regularly, and another 25 during the course of a month. So if the providers or the cable company charged me only $2 per channel for those 50, I'd be paying about what I pay now for Comcast. If I was charged $3 per channel, I would be paying considerably more - with many fewer choices.

I don't see the upside.

I'm actually with you on that line of thinking, that you WILL pay more if you watch more than 5 or 10 channels. Personally, I look at cable as an overall value, basing my decisions on what I get overall, not what I pay for each channel. The "why should everyone pay for it" train goes both directions. I'm sure there are channels that I watch that others detest paying for as much as I detest paying for channels I'll never watch. So, I balance it out. I currently get a package rate that makes the video portion about $50, and I watch about 25 channels on a regular basis, some on basic, some on digital, and some of the "big 4". And then, there are another few dozen channels that I watch "sometimes". Like when something big is happening, I'll turn on CNN, or when I'm bored I'll watch an old movie or TV show on another network.

I think the best we can hope for is what is being tested in some Xfinity markets, being that you pay a "basic" charge, then add on news, kids, etc if you want more. The problem I saw with that was that I needed most of the packages, aside from sports, and it ended up being close to the same amount as what I have now.

 

[FreddyE1977]

I have DirecTV and will not be affected by this as much as I was by their 1+ year
stand-off with Versus, which cost me pretty close to a full NHL season.

I don't watch any of those channels regularly. I enjoy the Fox Soccer Channel when
they show English Premiere League games on Sunday morning, but it's not appointment
viewing. I would rather they stand pat and try to keep the cost somewhat under control.
Switching is a major pain, and one of those options (Comcast) is an absolute non-starter with me.

I note this will cost me a number of the RSN's on my sports package that are still owned by
Fox. I wonder if they are going to pro-rate the cost of that package for me?

 

[ShawnHill1]

Geeze for us in the DFW Metro we could lose 3 Locals over this.
I will be one of em, I have DirecTV.

KDFW FOX 4 (FOX O&O)
WFAA ABC 8 (Belo)
KDFI MY 27 (FOX O&O)

Not quite...in your case, only WFAA (and KFWD) would be affected; KDFW and KDFI (and the rest of Fox Television Stations group), as well as Fox News Channel and Fox Business Network are on different contracts with DirecTV. I believe those expire next year.

 

[landtuna]

I'm actually with you on that line of thinking, that you WILL pay more if you watch more than 5 or 10 channels.

Unlike the majority of you I have actually real world experience with the Big Dish (C & Ku band), DISH, DirecTV and my local cable fiasco. The BUD (Big Ugly Dish) was by far the best. Best picture quality, best sound and least expensive. For the same subscriptions I got with cable and the two satellite providers it cost me $60 per year. DirecTV was $600+ per year and the other two were higher than that.

Don't tell me ala carte won't work. Been there. Done that.

 

[Joe_Capitano]

KDFW and KDFI... are on different contracts with DirecTV.

The FOX O&Os are good to go until year's end. FOX News' (not sure about Fox Business) expires January 31. In either event, it's probably a good idea to get that "Plan B" antenna on order.

 

[DToTheJ]

FX is just FOX but doesn't have to censor itself...

"There is no box." :

 

[TroyG]

Only The FOX Cable Networks that are being affected, Not The FOX/MyTV stations FOX owns & operates, or FOX News. These Are The Channels that are being affected : FX, Fox Movie Channel, Fox Sports Net (aka FS__________), Fox Soccer, Speed TV, FUEL TV, Fox College Sports, National Geographic Channel, NatGeo Wild. SportsSouth, & SUN Sports

 

[mnradiofan]

I'm actually with you on that line of thinking, that you WILL pay more if you watch more than 5 or 10 channels.

Unlike the majority of you I have actually real world experience with the Big Dish (C & Ku band), DISH, DirecTV and my local cable fiasco. The BUD (Big Ugly Dish) was by far the best. Best picture quality, best sound and least expensive. For the same subscriptions I got with cable and the two satellite providers it cost me $60 per year. DirecTV was $600+ per year and the other two were higher than that.

Don't tell me ala carte won't work. Been there. Done that.

There's a reason it's no longer around anymore, and that is that the model has changed. Sorry, I know you think it will be the same, but it just won't. When the "Big Ugly Dish" existed, cable programming was no more than repeats and niche programming. Now, the model has changed to actually buy and produce good first run programming. ESPN isn't just going to hang up their hats and say "Oh well, we'll just go back to charging 10 cents per subscriber", and unlike the BoD, Cable infrastructure costs quite a bit to maintain. And, as someone else pointed out, if programming providers sell directly to consumers, you need to provide billing, customer service, etc, which also costs money.

But, like I also stated, I think it would be cheaper if you only wanted a handful of channels. Without a doubt. Where I see this not working is when you really do want 200 channels, there is absolutely NO WAY that you'll pay less than $1 per channel in a "pick and choose" world (averaging it out, and accounting for what will surely be a $10 connection fee to cover the cost of maintaining the miles of cable, amplifiers, and equipment at the headends). Your asking for a complete overhaul of not only the cable industry, but also the programming industry, and stockholders of these companies aren't just going to start taking a loss. If anything, they will see it as a new revenue stream, with the ability to charge more for what THEY FEEL is programming you cannot live without.

 

[LKellerIII]

I'm actually with you on that line of thinking, that you WILL pay more if you watch more than 5 or 10 channels.

Unlike the majority of you I have actually real world experience with the Big Dish (C & Ku band), DISH, DirecTV and my local cable fiasco. The BUD (Big Ugly Dish) was by far the best. Best picture quality, best sound and least expensive. For the same subscriptions I got with cable and the two satellite providers it cost me $60 per year. DirecTV was $600+ per year and the other two were higher than that.

Don't tell me ala carte won't work. Been there. Done that.

There's a reason it's no longer around anymore, and that is that the model has changed. Sorry, I know you think it will be the same, but it just won't. When the "Big Ugly Dish" existed, cable programming was no more than repeats and niche programming. Now, the model has changed to actually buy and produce good first run programming. ESPN isn't just going to hang up their hats and say "Oh well, we'll just go back to charging 10 cents per subscriber", and unlike the BoD, Cable infrastructure costs quite a bit to maintain. And, as someone else pointed out, if programming providers sell directly to consumers, you need to provide billing, customer service, etc, which also costs money.

But, like I also stated, I think it would be cheaper if you only wanted a handful of channels. Without a doubt. Where I see this not working is when you really do want 200 channels, there is absolutely NO WAY that you'll pay less than $1 per channel in a "pick and choose" world (averaging it out, and accounting for what will surely be a $10 connection fee to cover the cost of maintaining the miles of cable, amplifiers, and equipment at the headends). Your asking for a complete overhaul of not only the cable industry, but also the programming industry, and stockholders of these companies aren't just going to start taking a loss. If anything, they will see it as a new revenue stream, with the ability to charge more for what THEY FEEL is programming you cannot live without.

Right. And those of you who think you will be able to do it all on the cheap in the future by streaming the internet - may be in for a rude awakening, too. Companies like NetFlix will be under increasing pressure to pay more for programming, as well as band width. AT&T, Verizon, etc. aren't going to spend billions expanding their band width to accommodate the coming world of dominant internet streaming. unless they are paid back by increasing fees from content providers, their subscribers, and (probably) both.

And by the way - "$1.00 per channel in a pick-and-choose world." Dream on! Think about it. In the "pick-and-choose" world, it woould be easier for content providers (Fox, etc.) to raise fees than now. As it is now, the cable and satellite companies put up somewhat of a fight and have the power to negotiate. In an a-la-carte world, they just raise fees, especially if they do it incrementally - calculating that a few of us Joe Schmos will drop them, but the vast majority will go along with it and pay more.

Even in the event that this fairy-tale scenario happens, providers would raise fees and within a short period of time, we'd be paying more than we do now with way fewer choices.

 

[gregg75]

Raising fees sure didn't work for Netflix. That's not always the answer.

I think a-la-carte and internet would both be cheaper for the consumer. Antenna your
locals (that would save about $15 alone in an a-la-carte bill).

 

[mnradiofan]

Raising fees sure didn't work for Netflix. That's not always the answer.

No, you're right, it didn't. But, I'm with Reed, it HAD to be done. The content deals are starting to come up for renewal, and as they start to pay for the new costs, they need to show shareholders that they are continuing with the same profit margins, or the company simply won't exist anymore. Part of that has to do with current shareholders thinking short term. They want an increase in their investment RIGHT NOW, vs the older investors were willing to take a loss for a few quarters or even a few years, if they knew the long term outlook was good.

But, part of the problem is the content holders. They want to raise prices on content year after year, thinking "Oh, it's OK, Netflix makes tons of money, so I should get my piece of that", and that thinking isn't all that wrong. Without the content, Netflix wouldn't have the subscribers, so Netflix HAS to pay the increased prices in content. There is no competition there, if Netflix wants Mad Men, they MUST get it through ONE source. So, that source can go "fine, you want it, here's what it costs, if that's too much, we are willing to walk away". The real loser in that fight will always be the consumer, even if the end result is that the consumer cancels the service.

Of course, this model cannot be sustained forever, because eventually people won't be watching it anymore, because they can't afford to pay for it. And when advertising no longer supports content creation (and it alone doesn't always do it, because advertisers want more specific audiences that Internet can bring) and people no longer can afford to pay for content to be created, then we are just going to live with LESS CONTENT. At the end of the day, entertainment is a business and needs to make money, if they can no longer afford "House" like content, then we will be left with "Jersey Shore" type content. (I realize there is quite a cost difference between the two, but my point still stands, as income falls, so must output.)

We, as consumers of any content, and this goes for books, internet, websites, TV, movies, etc) must decide when it is no longer worth it to us. To me, Cable is still worth it, but every year it gets harder and harder to justify the cost, especially as the competition for my entertainment dollar increases with streaming media, gaming, reading, and dozens of other things that have come along in the last 30 years.

 

[LKellerIII]

Raising fees sure didn't work for Netflix. That's not always the answer.

I think a-la-carte and internet would both be cheaper for the consumer. Antenna your
locals (that would save about $15 alone in an a-la-carte bill).

I was talking about raising fees in an incremental way. So NetFlix proves my point. Incremental raises (a little bit at a time, strategically planned) works because consumers are fully aware that inflation exists, and prices go up over time. So nominal and occasional increases in fees do not make them feel ripped-off. It explains why consumers are now willing to pay over $20,000 for "economy" cars.

NetFlix raised their prices is a very arrogant, ham-fisted way - basically telling their loyal customers to swallow a sudden 60% increase and bugger off if they didn't like it. Well, hundreds of thousands of their subscribers did bugger-off, and now NetFlix is suffering. I think they probably thought that the "inevitability" of it would make it easier for people to swallow. In my opinioin, if they had raised the two services (mailed DVDs and streaming), $1.00 each ($2 total) - and not told people they would have to have two separate accounts - accompanied by a clever and informative customer service campaign, they wouldn't have lost many subscribers.

 

[PTBoardOp94]

Raising fees sure didn't work for Netflix. That's not always the answer.

Netflix lost 4% of its subscribers in the most recent quarter. Sure, that's almost 1,000,000 people, and a steep drop-off from the forecasted growth, but from a revenue perspective is a positive for the company.

 

[nomadcowatbk]

Part of rising cable bills comes from local stations demanding more $ for retransmission, stations that most people can pick with a pair of rabbit ears and with less compression. Stations see retransmission fees as a source of profit. ISPs also will not put more $ into upgrading their networks for increased bandwith. If you don't care about live sports other than the NFL (Monday Night games are usually on a local station in the teams markets unless the game is blacked out) and can get pick up your local stations easily with an antenna, you don't need cable anymore. I only watch ESPN from Aug-early March. I'm sure many would subscribe to a sports only package if it was offered.

 

[LKellerIII]

Raising fees sure didn't work for Netflix. That's not always the answer.

Netflix lost 4% of its subscribers in the most recent quarter. Sure, that's almost 1,000,000 people, and a steep drop-off from the forecasted growth, but from a revenue perspective is a positive for the company.

Not true. Not the way their stock is tanking. The stock price dropped 27% today in after-hours trading - now under $86 per share. The high in July was about $305 per share. The stock has lost $9 billion in market value. NO WAY that can be spun into a positive for the company.

Revenue is up from the same time last year, but given the drop in subscriptions and white-hot consumer anger toward the company, the speculation is that it will take awhile for the bleeding to stop.

 

[gregg75]

^ditto.
All of the stock gurus are telling investors to bail out......quickly.