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Friday, January 18, 2013

Trying And Failing To Sell The "Cable TV Isn't Ripping Off Non-Sports Consumers" Myth

Alex Taberrok at Marginal Revolution tries to sell the standard-issue cable TV spiel that non-sports consumers aren't being ripped off by cable TV pricing practices:
Here is where the LA Times and the others go very wrong – they reason that $30 of the $40 charged is due to sports so each person is paying $7.50 for football ($7.50*4=$30) and $2.50 for Top Chef ($2.50*4=$10) and, therefore, the Top Chef viewer is being ripped off because 3/4 of their bill is going to support programming they never watch!


Conceptually it’s much clearer to say that each person is being charged $10 for the programming that they most want to watch.

Yet this does not change the underlying truth that the bill is still what it is! More of a sports fan's bill goes toward the things they prefer to watch, while less of someone who likes "Top Chef", say. The LAT article can be found here:
So far, people seem willing to pay. But the escalating costs are triggering worries that, at some point, consumers will begin ditching their cable and satellite subscriptions.

"We've got runaway sports rights, runaway sports salaries and what is essentially a high tax on a lot of households that don't have a lot of interest in sports," said John Malone, the cable industry pioneer and chairman of Liberty Media. "The consumer is really getting squeezed, as is the cable operator."

A key concern is that the higher bills driven by sports are being shouldered by subscribers whether they watch sports or not. National and local sports networks typically require cable and satellite companies to make their channels available to all customers.

"I pay $98 a month for cable and half of that is for sports?" said Vincent Castellanos, 51, a fashion stylist who lives in Los Feliz. "I've never once gone to a single sports channel. I wasn't even aware I was paying for it. I want my money back. Who do I call?"

As much as Taberrok might like to elide this, he can't ignore what's happening in San Diego with the Padres, which is a precursor to the whole house of cards falling down.

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