Re: Fox Sports San Diego 2012 for Padres games
04-09-2012 11:51:44 AM
I haven't seen anyone in this thread discuss the other part of the bundle vs. a-la-carte issue. It's not just that ABC/Disney brings you a bunch of channels, it's also that when AT&T signs a contract, they sign up to pay the per-subscriber-rate for each subscriber who gets that channel. So all of the U-200 subscribers are counted for each U-200 channel, not just the ones that watch it. This is true for all the channels across all the content providers at a tier.
A simple example: if you take the 4.00 figure for ESPN and say that (to pick a number out of the air) 2,000,000 U-verse subscribers have U-200. Thus AT&T would pay Disney $8,000,000 per month for ESPN. Assuming that about 20% of homes would subscribe a-la-carte if offerred, then to make that same $8,000,000 the price would have to be $20. I don't know about you, but I wouldn't be one of the 20% if the price were $20/month. So what percentage would pay $20? How about 10%. Well, that's too bad, but because if only 10% take it, the price would have to be $40/month.
Yes, you subsidize the channels you don't want to get the channels you do want. And so do I. And we avoid the shopping channels that help subsidize the content channels for all of us.
This is what our quasi-free market has come up with, which is probably better than the federal government could have imposed.
You numbers are probably not that far off. One additional point is that the $4 carriage fee is all paid to ESPN. It does not include U-verse's cost for delivery of the channel or the additional amount that U-verse needs to charge to cover their overhead. Thus, the customer now pays more than the $4/month for ESPN.
In your example if only 20% of subscribe selected ESPN al la carte, the monthly fee that U-verse would have to pay to ESPN would be $20/month per subscriber; however, what U-verse charges the customer would have be higher than that amount. U-verse might have to charge the customer $30/month for ESPN.