Commentary

New Linear TV Packages Won't Carry A La Carte Networks

by Wayne Friedman , Staff Writer, October 13, 2017

Traditional public battles between big cable-centric network companies and pay TV providers will have a new story arc in the coming years.

Viacom is now battling Charter Communications, the second-biggest U.S. cable operator, over a renewal carriage deal of Viacom's 23 networks on the pay TV provider.

This would seem like an old industry story: Lots of barbs traded back and forth between companies, and then a deadline comes. Perhaps a day or two of blackouts, and some TV ads pushing consumers to complain to the powers that be. All to be resolved a short time later.

Until the next thing comes along.

But what if future legacy deals between established pay TV providers and traditional cable-networks just never resolved themselves? TV limbo.

This is part of the reason that Viacom, Discovery Communications and other cable-only network groups are continuing to look at direct-to-consumer digital platforms/packages for their future growth and stability.

Here's the rub: New, low-cost digital live TV network services -- DirecTV Now, YouTube TV and Hulu with Live TV -- need to cut somewhere. They look to weed out mid-level or lower-level interest cable networks. Companies like Viacom and Discovery have some of these.

This is why such companies are looking to start up TV packages of their own -- billed as “non-sports” packages, perhaps at a low $10-a-month price.

This kind of package would be far less than the $35-to-$50 range that DirecTV Now, YouTube TV and Hulu with Live TV have launched with -- and they have big broadcast networks and their associated cable networks on board.

Media content looks to leverage many TV network brands against pay TV providers for greater carriage fees. Ultimately, this can be passed on to TV consumers.

Here is Viacom's leverage: 23 networks comprising 15% to 20% of all cable network viewing.

But what if TV consumers could choose a network at a time -- per month, per week, per day? They could buy 200 to 300 channels on an a la carte basis -- perhaps each with their own app for a price tag of 25 cents to 50 cents a month.

We know one thing: That would upset cable network groups' business model in a major way. And we haven't even talked about what this means for cable TV network advertisers.

What would the TV world look like then?

cable tv, streaming, tv

4 comments about "New Linear TV Packages Won't Carry A La Carte Networks".

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Ed Papazian from Media Dynamics Inc, October 13, 2017 at 10:21 a.m.
The problem, Wayne, is that if a true a la carte system existed consumers wouldn't have so many choices to make as most of the selectively programmed channels would cease to exist. Worse, the average consumer would probably end up paying twice the current tab for 65-75 "wanted" channels as is now paid for 200.
Reply

Paula Lynn from Who Else Unlimited, October 14, 2017 at 10:25 a.m.

And selection over a couple of years would disappear with consolidation/apps with more than one of the networks. There would also be a worse audience drop off.

Bill Shane from Eastlan Ratings replied, October 14, 2017 at 2:53 p.m.

65-75 channels? Really? I'm sure we can all learn how to get along with 35-40. Something needs to be done as I'm paying for all the sports crap and I watch an hour every two weeks of sports. Once baseball season is over, it'll be down to zero. As it is, Comcast is charging me $160 a month for the 2nd lowest package they have along with internet. And they wonder why people are cord cutting. I'm sure they know, but they sure as hell don't do anything about it.

Ed Papazian from Media Dynamics Inc, October 15, 2017 at 8:24 a.m.

Yes, Bill, really!. Just because you don't want more than 35-40 channels doesn't mean that others will agree with you. For example, frequent viewers who account for most viewing and who watch many more channels than the national average will probably require a large number of skinny bundles to satisy their own and their family's appetite for TV fare. Like it or not, all of the bundles include a number of channels that are not wanted----often lots of them. To get what you really want over a long period of time not just a week you will have to consider using a number of bundles or go back and forth, cancelling one, signing the other, then back again---but this works only as long as the bundle sellers offer such flexible cancellation options. That may not be forever.