A reader writes:
Former telecom industry attorney here. Alyssa Rosenberg may have her finger on the pulse of what the growing young consumer base wants (and for what it's worth, I completely agree), but the economics of a switch to more flexible channel delivery – combined with FCC policy priorities – really make a la carte (or any version thereof) unrealistic.
The theoretical benefits to consumers are undercut by the economics for programmers. Currently, the big networks – ESPN, CNN, Discovery, the Scripps Network Interactive lifestyle channels (Food, HGTV, etc.) – have strong enough viewer shares that they can force cable companies to pay them for their wares, giving them an additional revenue stream to fund the programming you love. Here's the catch: that only works if every subscriber pays that fee, not just the ones who watch it, and while almost everyone watches at least one of those channels, the portion watching each one isn't nearly as high as you'd think.
The fees these networks charge are very secretive (even the trade rags only publish guesses), but right now, ESPN is rumored to charge around $8/subscriber (the highest by leaps and bounds; CNN and the others float somewhere around $1-$2 a sub based on scuttlebutt). If forced to go a la carte and only collect the fee for each subscriber who affirmatively chose that station, these programmers will raise their per subscriber fees to whatever level necessary to maintain the revenue stream without batting an eyelash. The result? You'd end up paying about the same amount each month, but for fewer channels. You've essentially exchanged the benefit of channel surfing for unexpected programming for the benefit of not needing to wade through channels you don't watch when scanning the channel guide. That's not really much of an improvement in consumer welfare.
The other issue, as she starts to note, is that a move to any more flexible system (even not strict a la carte) will cause "a bunch of networks [to] die in the process." The problem is that the majority of those that will be killed are stations owned by, or with programming oriented toward, women, minorities, and foreign language audiences. (To be clear, when I say "women-oriented programming", I'm talking Lifetime and We, networks whose audiences are almost solely women within specific age demographics, versus, say, Bravo, which draws from both sexes and a wider age range – ladies, no disrespect!) The business model for those stations, given their more limited natural audience base, is simple: give your programming to cable/satellite operators for free, and use the universal distribution to raise your ad rates while hoping that the additional exposure gains you more casual viewers. The FCC encourages this with policies that support the carriage of such stations, and cable companies often use their carriage of such stations as a sort of "good actor" shield when accused of more nefarious behavior.
Under a la carte, however, those stations lose all their casual viewers, who – when asked to affirmatively opt into channels, all of which the cable company will charge them SOMETHING for (as the price of convenience for not sending you everything) – will not check their boxes. That means fewer viewers, lower ad revenues, and near certain failure for most. Advocates for these channels have made darn sure the FCC sees these numbers. Politics being as they so often are, no FCC commissioner wants to be the person advocating a la carte when they know they will get tremendous brush back from the NAACP and other groups – especially, as described above, when the benefits to consumers are tenuous and limited.
The Dish 