A La Carte Cable Scenario: Pricey, Fewer, And Less-Profitable Channels, Viewer Hunger?
In an unbundled, a la carte cable TV world, you are looking at a much smaller selection of cable channels being profitable -- maybe five to 10. This figure is what Laura Martin, media analyst of Needham & Co., estimates.
That's out of some 125 viable cable networks, which would then be uneconomic to run. (Of these, 60-plus cable networks sell significant advertising inventory).
This five to 10 range is also the figure some research studies have suggested is the real number of channels we regularly or semi-regularly watch -- this out of a 100 to 200 routinely available on cable, satellite, or telco multi-channel services.
Martin says there is more bad news should the Federal Communications Commission move in the a-la-carte direction: That $300 billion market capitalization among public traded stocks would disappear. This breaks down further to seeing 75% of all cable advertising revenues departing, along with 15% to 20% of all subscription revenues.
I'm guessing that with this model the consumer cost for monthly cable packages probably wouldn’t be lowered that much. Those surviving networks will need to charge a lot more to make ends meet. A la carte means we get what we want -- but the savings won't be as much as we think.
Who would be the surviving channels? You could imagine channels supported by big media companies that could amortize programming costs across other networks -- cable, broadcast, VOD, or otherwise. ESPN, USA Network, TBS, FX, and TNT perhaps? Many more niche networks like A&E, Discovery, Bravo, E! and MTV.
Who gains? Perhaps YouTube, Netflix, AOL, Yahoo and Hulu, as consumers gravitate towards cheaper options. Still, Martin says this group needs to do better in terms of quality, search/discovery, and longer length video/TV content.
In its more traditional association, a la carte means picking just one or two foods/dishes from the menu. You might proceed this way because your appetite is low. But restaurants are a savvy bunch, which doesn't mean you bill will end up lower. Even then, no one goes to a restaurant only to leave hungry.