The Real Reason Your Cable Bill is So High
If you’re like me, you probably have an ungodly number of TV channels included in your cable subscription… the VAST majority of which you probably NEVER watch. They’re like little electronic speed bumps that you hop across when you’re scrolling through your on-screen program guide, looking for the good stuff.
Sound about right?
The fact is that you’re paying for those channels even if you don’t watch them. Maybe not a lot individually, but put them together and you’re talking some serious bucks. The industry calls that ‘bundling’, where a programmer like Disney or Viacom offers a whole bunch of channels to your cable operator, who then turns around and bundles them together in a package or tier of channels that you select when you pay for your cable service.
Now the tricky part is that some of these channels are so valuable that they eat up a substantial part of your cable programming costs. ESPN is far-and-away the most expensive single service, charging cable operators an average of over $5 a subscriber per month. Now if you’re a rabid sports fan and love professional and college sports, then it’s worth it. If you couldn’t care less about any team other than the Redskins, then that big ESPN bill doesn’t seem fair.
But what can you do about it?
Not much if you want to continue to subscribe to cable or satellite. Athletes demand increasingly more expensive salaries… teams and leagues have to ask for more expensive TV contracts to pay for those salaries… and cable operators have to fork over more dollars to make up the difference. The challenge for the cable sports industrial complex (athletes + leagues/colleges + TV distributors) is to not price themselves out of the market for subscribers.
Yet this is already happening.
More than four million American homes have cut the cable entirely and are relying on streaming and over-the-air for their video viewing. But that’s where sports come again into play. If you want to watch your favorite team from across the country, cable or satellite is the only way to go since those providers have exclusive rights to air sporting events as per the terms of their lucrative contracts.
But could there come a day when a Netflix or Amazon decides that they want to dip their toes into the sports market? I can envision how that might start: a smaller sports league like women’s soccer looks for national exposure, or a single sporting event like a boxing championship wants to move away from pay-per-view and gain a wider audience. Netflix makes the event available via streaming, subscribers who want to view it click a button and pay for it, and ta-daa a new world has opened up. Over time, a few of the smaller college conferences hungry for national coverage do deals with Amazon to carry their lesser sports, then move on to the major ones. More cable subscribers begin to follow their teams online so have less of a need for cable, and momentum builds as they terminate their cable services. As Netflix and Amazon grow their user base, sports and other original content not available on cable flourishes.
Sports is the big kahuna in this scenario. As long as cable and satellite hang together with the sports leagues, rabid fans will hang with them and pay nearly any price to follow their favorite teams. Get too greedy with increasing costs, and fans will be dying to jump ship if alternatives present themselves.
There’s an old saying: if but for the lack of a nail the war was lost. Athlete salaries are the nail in this entire scenario, and they are the real reason your cable bill is so high. Get those under control and the current system can hold together for a long time to come, and in fact thrive as cable operators focus more on their own original content. But keep things on the same upward trajectory, and the system will not be able to withstand the pressure of costs alongside the allure of content alternatives.
In the end, the consumer will make the decision on who wins and who loses. Let’s deal with the nail before things get out of control.