Cable's A La Carte Packaging Will Limit Cable Nets, Kagan Says

There is little benefit to "a la carte" cable network packaging for consumers, according to Monterey, Calif.-based Kagan Research. Moving to a la carte network packaging for consumers would mean a reduction in diversity of the networks that consumers can choose from, according to Kagan.

All this comes from other research showing that viewers really just watch 10 to 14 channels. For that reason, and because of continuing high prices for monthly cable, some federal regulators and members of Congress have targeted the cable business, demanding that the cable industry offer up a la carte programming.

Cable networks and cable systems have almost universally responded that this would throw the entire business into chaos. Media executives say that many marginal networks would go out of business.

Derek Baine, a senior analyst at Kagan Research, says there is little historical appetite for consumers to pick individual programming. For example, Blaine points to an early 1990s DirecTV plan to offer channels individually. The satellite service dropped the idea, he said, because DirecTV found consumers were "paralyzed" in trying to sort through a mass of network options.



Defending the current system, Blaine says actual average retail pricing per channel has dropped in recent years to 71 cents in 2005 from 75 cents in 2000. The overall average monthly cable bill for consumers has grown from just under $17 a month in 1990 to just over $45 a month in 2005; the average number of channels has also grown during that time, to 64 from 18.

If consumers complain about overall higher monthly bills, Baine says that is misguided, because digital enhanced services--digital video recorders and high-definition TV, not programming--are the real reason for higher monthly charges.

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