Wednesday, March 10, 2010

What Does My Cable Or Satellite Provider Pay For The Channels I Have ?

Below is a chart detailing the prices Dish Network, DirecTV, Charter Cable, Time Warner, and Comcast pay to the various networks to broadcast their stations via their service.

One common question is, "If these are the prices, how can they make the deals they do for the first six months or a year?" That's because of deals that are struck. When I worked with Charter, I discovered that the average station was a flat rate of 5¢ per channel for the first six months in cost to to them. This means that if they provided you 60 channels for $29.99 - their cost for the first six months was only $3. The next six months channel wholesale costs would move to half of their normal value. The second year, channels would cost similar to what you see below.


Via The Consumerist:



(CLICK ON CHART FOR LARGER VIEW)


One thing this chart really shows is that "a la carte pricing" where the consumer pays only for channels they want would be a much better deal. For example, ESPN, which I don't watch, would allow me to get 20+ channels in it's place.

4 comments:

Anonymous said...

"One thing this chart really shows is that "a la carte pricing" where the consumer pays only for channels they want would be a much better deal. For example, ESPN, which I don't watch, would allow me to get 20+ channels in it's place."

I think you're dead wrong on this. There are enough people that would subscribe to ESPN that they'd stay in business, but niche channels with small audiences would have to raise their rates so much that people wouldn't subscribe to them at all.

Comcast already has enough problems billing people correctly, just imagine the logistical nightmare of each customer having a slightly different bill each month.

I think it would also be hugely confusing to customers. I'd have a real hard time picking which channels I wanted, about the only thing I do know is I wouldn't want any sports channels.

Now don't get me wrong, I'd rather have a cable system where I pay the money to the channels I want to see and not to the ones I don't. Give me ESPN, just don't give them $4 of mine, give it to Discovery instead.

atlibertytosay said...

That's not how choice billing would work.

It would be tiered:

Choose 15 = $19.99

Choose 20 = $24.99

Choose 30 $29.99

Choose 50 = $39.99

movie channels still premium priced.

So actually it would simplify billing.

espn is high because if all the licensing they have to pay + they know just about everyone will ask for it. I'd love to see actual subscriptions though.

I honestly think each network should get 55€ per subscriber.

Anonymous said...

@atlibertytosay: I assume you meant 55¢.

It seems like a better way to do it is deliver all channels to everyone, have a base price of say $20/mo for the first five channels you watch. If you spend more than 15 minutes watching a channel, it tacks on another $1.50/mo up to a certain cap, maybe $50 a month.

atlibertytosay said...

Yeah ... I don't know why it put ghat weird symbol. My pricing model would give the cable companies the same revenue (55%)