Corporate Socialism and the Television Industry

Margaret Atkins MunroLet's Talk About MoneyLeave a Comment

Paying for television has always bothered me. As a child, everyone enjoyed free, clear transmission, albeit with the cutting-edge technology of rabbit-ears or rooftop antennas. There were few channels, but once the television was plugged in, the sole additional cost was pennies for electricity.

Forty years later, my family’s satellite dish stands proud in the front yard, and we receive access to 210+ digital channels although we collectively watch approximately nine; the cost of our subscription is subsidizing the other 200+. Even more shocking is that we are watching those nine less and less. So, if I look at the cost/benefit quotient rationally, even if my overall bill isn’t increasing each month, the price per hour watched is. I am fast reaching the point when I am going to cut the cord – what I receive in exchange for the price I pay just isn’t worth it.

A recent report on the state of the paid television industry backs up my feelings exactly. It showed that cable, satellite and FIOS all lost subscribers in the third quarter of 2010. The providers would try to convince you of two things: first, that this shift is due merely to customers moving from cable to satellite, or vice versa, and second, that customers are getting their television fix from Internet streaming services, which provide programs a day or two late, and perhaps with a degradation in quality, but with a very attractive price tag – it’s free. What they are failing to address is a third possibility: that broadcast television is rapidly becoming obsolete.

I believe we are watching the implosion of one of the largest corporate socialist schemes to ever exist in this country: subscription television. The shrinking customer base is not happening due to the quality of programming, or quality of transmission. Instead, this is happening because the industry is failing to read the signs, and change their business model accordingly. Customers are unhappy paying for content they do not watch, and are finding other ways to access the stations, and the programs, they do.

Years ago, I eased into the idea of paying for television transmission by first paying for basic cable, but that $2/month fee has now mushroomed to over $80/month for a mostly superfluous array of channels. My satellite provider maintains that my life is abundantly better now that I am able to watch Daystar, DIY Network, Chiller, Boomerang, Fuse, NASA TV, Golden Eagle Broadcasting, the Golf Network, BYU TV, the Church Channel, and SOAPnet. I pay for these, together with dozens of other stations I will never watch, because they are bundled together into the smallest package I can get that still has the nine stations my family watches.

The television subscription service model, of lumping tens and hundreds of stations together, and selling bundled packages, has been enormously successful until recently; cable and satellite companies have convinced the public that more stations, and more voices, are not only better, but also necessary. Their rationale is that charging 5¢ or 10¢ per station, whether the customer watches it or not, is not an unreasonable fee, in that it enables all of these hundreds of stations to remain economically viable.

Until now, this has been an extremely profitable business model, and the pay-for-television cartel is loath to see any significant changes. The customer always has a choice between larger or smaller packages, but picking and choosing only those stations you watch has never been an option. And when Congress, through the efforts primarily of John McCain, attempted to tamper with the bundling model, the industry fought back with everything it had.

Subscription services are failing to recognize that their business model must change if paid television is to remain a viable industry. In these recessionary times, where discretionary funds are vanishing as the cost of life’s necessities rise, many families are embracing the idea of turning off the television set, or at least the signals streaming into it. Paying for television is a fairly recent phenomenon in this country—the majority of people remember what came before, and are finding ways to return to that model. With the advent and vast availability of Internet streaming services, programs are now available within days of their initial broadcasts and entire seasons of favored programs arrive on DVD within a few months.

Paying for television still bothers me, but I am willing to compromise. I might be willing to stay with my satellite company if my subscription service moves to a la carte pricing, or custom bundling. The concept of “Must See T.V.” no longer exists; sitting down at a set time to catch the latest episode is no longer necessary. The industry is fighting the wrong battle at the wrong time, attempting to maintain a business model that organizations like Hulu, Netflix, and even my public library are successfully challenging.

It seems we’ve come full circle; once again, free, or nearly free, programming is readily available to those with the patience and contemporary cutting-edge technology to access it.