JohnBckWld, you forgot to eliminate News 12 from your “useful stations” list. I only watch the bloody thing to see if my university has a snow day/is inexplicably closed, praise Og. Fucking useless, I say.
Heh. This was Charlie Ergen’s intended business plan before he got his first satellite launched.
Two problems. The first is for the cable company. If each customer only took a few channels, there’s no way for the cable company to make back a return on his large fixed investment, even if penetration went to ~100%. Because very, very few people will pay, say, $10 for ESPN and another $5 for TNN or whatever. The per-subscriber fees would just be too low to justify having run the lines.
The second is that pretty much no company owns only one cable channel. What that means is that they use the networks that just about everybody wants as leverage to get channel space for those that just a few people (now, at least) want. So if you go to Vivendi, for example, and say “Hi. I want USA network to make available to my customers for a fee,” The response will be, “No. make it available to all your customers – we’re trying to capture share from the networks, and we can’t do that if people have to sign up for our network proactively. Oh, and BTW, we want you to carry Sci-Fi, too.” Ghod forbid you should make the same request of Viacom or Disney!
So while the cable companies are indeed evil, rapacious barons out to take your money, they got problems, too. 
Some very good questions in this post:
I’ll let your interpretation play out before I respond to this question as you do indeed ask it again.
This is true for a lot of stations. Usually, these are the less popular stations. The big stations (virtually everything owned by Turner, FOX, Time Warner, or Disney, which constitutes about 2/3 of the average cable lineup…MTV, ESPN, ESPN2, Comedy Central, the Sci-Fi Network, the Cartoon Network, Nickelodeon, FOX News, CNN…just about everything big except USA) actually charge a substantially lower “per subscriber” fee if included on the main tier. Furthermore, they offer substantial discounts for higher number of subscribers. Basically, the more people seeing the channel, the less the fee is. The thought process behind that is the fact that those programmers also make a huge chunk of revenue through advertising. The more people who see the programming, the more money the advertising makes.
I’ll let your further explanation again pass before touching on the question.
Now, I’ll answer the question.
You raise a very good point…one which the cable companies’ representatives field numerous times a day. It is a diffiult explanation, but I’ll try it (I’m not an accountant or an attorney…I’m a technical writer)…
I explained a bit before about how programmers offer discounts to cable companies on a per subscriber and a per tier basis. I’ll try to give an example based on ESPN. I have seen these demographics simply because it is the most expensive “non-pay” channel on cable. Locally, the cable company is charged about $1 per subscriber to air the channel. However, since it is on the main tier, it is discounted about 75% of what it would cost on a secondary tier. The thought process behind that is simply the fact that if ESPN would be a strong selling point for whatever tier it would be located. Charging $4 dollars to send that channel would not be absurd simply because most people who want the channel would pay that price.
Furthermore, our cable system has about 45,000 subscribers. That is considered a small-medium sized system in the industry, so it gets another small discount because of the number of subscribers. We’d probably see about another $0.50 tacked on if the system was a “small” one. However, since that channel is tiered, meaning less people see it, the company would take a massiv hit simply because only about a quarter of the subscribers would order it (making it “tiny” on a subscriber scale). It would not be unreasonable to assume that ESPN would charge about $6 a subscriber if our cable company put it on a tiered package.
Of course only about half of the typical cable bill is actually programming costs. The other half is mostly overhead/expansion costs. Cable companies rarely run in the black because they are always making investments in the future by laying out new plant. In stagnant cities, the cable company is oftentimes the most profitable industry in the city because it doesn’t have to expand. However, in growing cities, cable companies tend to lose money because their profits are used to create more profits in the future. Oftentimes, these companies tend to change hands frequently because investors eventually want to see some sort of profit…and the only way that profit can be achieved is by selling off the assets. We have to figure that these overhead costs would remain constant despite how many channels a person ordered. So, I am assuming that a person who only wanted to order ESPN in my city would still pay about $6 for the programming cost and another $17.50 for overhead costs. Add another buck or two for company profit, and were at about $25 for one stinking channel.
I love this suggestion…and with the advent of digital cable, it may become possible to a reasonable extent.
In the old days of analog cable, this technology was simply not feasible. There were three ways to provide channel packages:
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Positive traps. This is the very old method which some cable companies still use. Remember when HBO and Shotime used to be scrambled? Back then, the cable company would use a positive trap, a small cyllindrical object that would promote the proper components of a scrambled signal so that an actual picture would come through. These traps were very expensive (about six bucks apiece today), they oftentimes needed to be replaced (they generally only last about 2-3 years in constant use), and were oftentimes stolen. In most cases, one trap would be needed for each channel which needed to be descrambled. A string of 9 or 10 traps would not only be difficult to conceal and protect, they would be downright expensive to replace.
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Negative traps. These are common still today in analog systems. They are a bit cheaper (about $3 apiece). These traps resist certain signals. The problem here is that not many people get all the channels…therefore, almost everyone needs a trap. Furthermore, they tend to lose signal as well as deteriorate as time goes on. Five years ago, “bad trap” was the second most
common cause for a service call (after “bad connector”) in my local cable company. However, the use of traps was reverse-cost-effective. The fewer channels a subscriber ordered, the more traps he needed. -
Addressable convertors. These were actually the best idea of the bunch. They had the capability to block out numerous channel plans. Unfortunately, these convertors were easy to “hot-wire” and very expensive to replace. Furthermore, no one wanted a “cable box” even though the industry wanted to use the term “signal convertor” to fancy it up a bit. Many cable companies phased out the convertors in the '90’s simply because the lack of a need to have a box was a huge selling point for them (let us not also forget unlimited outlets for a one time hookup fee per outlet…then they were yours forever).
The biggest mistake in the cable industry in the past few years was the mistaken idea of using such a generic term such as “digital cable” to the product they were offering. Most people don’t know what the term “digital” means. A lot of people still associate the word “digital” with a clock that doesn’t have hands.
“Cable computer” would have been a much better term IMHO. That is exactly what a digital receiver is. From a digital access cotroller (DAC), an operator is able to block out whichever bandwidth he or she chooses. Of course, cable tiers, given the curren technnology, will always exist because it is only able to block out any certain channel of bandwidth in its entirety, which is actually about anywhere from 10-25 (much fewer with HDTV) actual channels on a digital receiver. What a cable conmpany could possibly offer for services once they are forced to get rid of analog signal all together (another event that will be blamed on the cable companies) is staggering. Dish companies are at a slight disadvantage here because they are currently only allowed to use certain bandwidth (about 1050-2000 mghz). They are currently pushing their limits. The only advances in the immediate future for satellite companies relies in advances in signal compression ratios. Cable, on the other hand, is currently only limited by technology. Since the entire signal is being kept bottled up in the shielded lines, the FCC does not regulate what they can use…only that they keep it from leaking. The problem is, many cable companies are going to drive themselves bankrupt in an effort to deal with corruption (anyone remember Adelphia Communications?).
I hope this will answer your question. The technology isn’t quite there yet, but it is close. Keep in mind that bandwidth is valuable and so is plant. Cable and dish companies will alway require a certain lower limit in fees for programming. However, the basic cable plan’s intention is to give the average viewer a good, broad choice when trying to decide what to watch. However, I am all for charging the people who want to watch ESPN an extra $6 a month so my rate can be lower.
Also, before 9/11 there was legislation in congress to make the pricing adjustments in tiering requirements in programmers’ contracts illegal. Rest assured that this agenda will again get focus if the world events are to die down a bit. However, the current discounts given to companies with large viewerships will likely always be in place.
It took me a long time to understand that paragraph. I kept underestimating the importance of the comma after “WB”.
And it is a very good question.
The first “cable” companies ever built were twin-pair leads that were attached to a big antenna on a hill. These companies have existed almost as long as the black and white television. In many areas, it was downright impossible to receive any sort of reception without rabbit ears. People were wiling to pay just to be able to see the picture. Of course, the local programmers felt they had a right to charge for the content of those broadcasts since they were no longer being offered to the public for free.
I wish that was the case…but, in fact…wierd as it may sound, the programmer is already “saving” you money by having you as a subscriber.