Why Pay For Channels You Don’t Watch? Ctd

Andrew Sullivan —  Dec 14 2011 @ 5:06pm

A reader writes:

You quoted a reader who believes that cable bundling "enables" Fox News and that the network would be economically devastated if cable channels were a la carte. First off, this argument seems to me to be the flip side of the FCC's reasoning that bundling is necessary because otherwise many niche networks (women-oriented networks, minority-oriented networks, foreign language networks, MSNBC, etc.) would fail.  Now, I suspect that your reader who does not want to pay his cable company for channels he does not watch would be happy to have the government tax me to subsidize channels that I don't watch.

Seriously, though, I think your reader gets the economics wrong.  

As has been stated more eloquently in other reader pieces you've published that FoxNews, or ESPN for that matter, would have to charge much more on a "per loyal viewer" basis than on a "per cable system subscriber" basis to make the same revenue.  And, they likely will be able to.  Maybe people will be willing to pay a la carte for 10% or so of the channels they now get.  Guess what – their cable bill will not go down by 90%!  Maybe it will go down by 15%?  20%?  The end result is that they will be paying 75% to 80% of their current bill for 10% or so of the channels.  

ESPN won't go away, and neither will FoxNews.  In fact, their ratings will probably go up, because their loyal viewers will have a smaller lineup of channels to choose from if on any evening they fell like watching something else.

Another is on the same page:

Your reader who wrote that a la carte cable would sink Fox News missed the mark:

Black and Hispanic viewers would flee the network en mass. It would suffer crippling losses in the Northeast, West Coast and parts of the Midwest. … Needless to say, the loss of such huge demographic swaths would cause many advertisers to jump ship.

But those demographic swaths wouldn't be "lost" if cable changed to a la carte, because they are already not watching. Keep in mind that advertisers don't advertise to "subscribers"; they advertise to "viewers." A Fox News advertiser would really have to have their head in the sand if they think that their ads during Hannity are reaching Black and Hispanic viewers in the Northeast and the West Coast.

The real consequence of a la carte pricing would be to force active viewers to pay more. If liberals choose not to pay $.70 a month for a channel they hate, Fox would not have to change a thing so long as the viewers who love them are willing to make up the difference. So the real question is how many Fox viewers – not mere subscribers – would flee if their per-month cost went from $.70 to, say, $5.00. Plenty of Fox viewers are very devoted to the network, and in economic terms there are few substitutes so demand for Fox is pretty inelastic, so I suspect the network would be able to continue to exist.


If you want a perfect example of what your reader is proposing, look to your friends to the North. Last spring, Sun News Network (slangily called Fox News North) launched their populist right-wing news network, regularly going on about the war on fun, heretical leftists and beaming in some big-name conservative pundits from the US. They were doing this on basic cable for awhile, because they owned a basic cable channel low on the spectrum (channel 15). However, they got that channel years ago when it just gave weather updates and the like. Our National Communications Control Board (CRTC) saw that they had switched over to a specialty channel without updating their license and they were forced to move after six months or so. Now you can only get them as a specialty channel, and their ratings have dropped like a stone.

This article should fill on any gaps. I couldn't find their numbers for last month, but they only went off channel 15 recently. Check it out. There is a market for this stuff, but once it submits to the all-mighty dollar, it can't hold its own.

At least not in Canada, that is. Dish coverage of "Fox News North" here and here. Pareene said of a similar promo as the one above, "in case you're curious about what hardcore nationalism looks like in the world's most modest country."