Tuesday, August 16, 2011

Why cable prices go up

"Ambition is the willingness to kill the things you love and eat them in order to stay alive."

I worked for Dish Network for four years before the bastiches fired me, and learned a lot about the television industry during that time. This week, Gizmodo is running a #fixcable series, and discussed the rising price of cable. In it, the writer made this statement:

"But wait! What about satellite? Doesn't satellite fix everything? No... According to the Government Accountability Office, satellite services have little-to-no effect on cable prices."

I had my own viewpoint on this, which I attempted to share last night. It appears the moderators rejected my response, which is disappointing. So I will share it here:

Actually, satellite competition has had a big effect on prices.... it's driven them up. Because before satellite came in, the negotiation between the cable companies and the programmers was a take-it-or-leave-it deal from the cable company. Oh, the customers will complain if we don't carry the channel, but what else can they do? 

Now, the programmers are in the drivers seat because they can hike their prices up and play the competitors against each other. Say you're a cable company that doesn't want to take the programmer's price increase. And they're so ballsy these days in that some come in wanting to double their price*... they say it's only a few pennies per customer, but when every channel in your hundred channel package wants a few more pennies, that can add up pretty fast. 

So if you decide to stand up to them, they'll pull their signal and your competitor will fight their battle for them by launching a blanket campaign that they have the channel you don't carry anymore... which is somewhat short-sighted since the competitor is empowering that same hardball game when their own contract is up. 

The programmers will just keep driving the prices up and up, until the whole system collapses in on itself. The only way I see wide-spread cord-cutting being stalled is perhaps if the government legislates a la carte, and lets the customers decide if each channel is worth what the programmers think they're worth.

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