Saturday, December 12, 2015

If those figures are true, it's outrageous!

I was surprised to read an article in the Daily Beast alleging that sports channels cost cable TV subscribers an exorbitant share of their subscription.

Don’t buy ESPN’s PR talk that its 7 million-household dip in subscribers is just a blip. It’s for real, and the end of its empire will have widespread consequences for the way you watch sports and pay for TV.

. . .

The ... sports [program 'bundle'] arms race now is estimated by longtime cable TV and sports industry executive Leo Hindery to cost each cable household $35 to $40 per month. And, again, that’s whether those households watch sports or not.

Appearing on Bloomberg TV last August, Hindery added that “…if you ask (the average subscriber) that question, ‘Are you comfortable with that?’, firstly they’d pass out at the question. They have no sense that they’re paying that kind of number.”

. . .

The transparency, direct access, and choice that consumers have come to love in the “over-the-top” world of Netflix and Hulu is the mortal enemy of the cable industry. Those places don’t have the hide-the-ball billing and bundling practices that jack up prices and rebill millions of people monthly.

Somehow, when the Netflix movie cornucopia costs you $7.99 a month, realizing you’re paying 40 bucks for tedious Major League Baseball games and sleep-inducing PGA golf tournaments seems like a lot-lot-lot of money.

As consumers figure out the con and start making value judgments, they’re throwing extraneous programming overboard like a balloonist dropping sandbags. Over the side goes premium pay TV, like HBO and Showtime, and out goes the “bundle” from more and more households. And for the record, only 12 percent of cable subscribers in a recent survey say they’d pay more than $20 per month for a stand-alone sports bundle, if such a thing were separately available.

. . .

The brazen economics of modern sports are being revealed and dismantled by the Internet, and the coming fumble-pile of desperate industry participants should make for some great viewing.

There's more at the link.  It's worth reading in full - the details are fascinating.

If the article's numbers are correct, this is yet another example of how the US consumer is milked like a cow by big business and its cosy partner, Big Government.  From medical care to cable TV to cars and trucks, prices are jacked up to the point where they bear no relationship whatsoever to the true value of what's being purchased.  Instead, the money pays for middleman after middleman after middleman, each of whom rakes off a 'cut' of the money.  A few examples:

  • If you use a CPAP machine to help you sleep, be aware that they're hardly rocket science.  It was developed by a man who tested it on his friends, with no medical monitoring whatsoever.  Nevertheless, if you want one you'll have to undergo a 'sleep study' costing at least hundreds, if not thousands of dollars;  get a prescription from a doctor;  have it sold to you by a medical supply company that inflates the price dramatically;  and have that company refuse to give you the instructions you need to reprogram the machine yourself in case of changes in your sleep pattern.  No, you've got to go back to them, and perhaps get another 'sleep study', before they'll condescend to do that for you - all at a cost to your pocket.  None of these steps except the original diagnosis are actually medically necessary, and they often don't apply overseas.
  • The price of vehicles today is ridiculous.  The 'Big Three' face union-driven labor costs that vary according to who does the reporting, but are widely understood to be between $40 and $60 per hour across their entire labor force when all benefits are factored in.  The dealer network adds thousands to the price of every vehicle, yet it isn't needed at all in this day and age.  By cutting out the middleman, you could buy your car over the Internet at a much lower price without needing a dealer at all (the sales model adopted by Tesla);  but the network fights such developments tooth and nail, and state legislatures obediently pass laws to protect old-fashioned dealers at the expense of consumers.
  • The government fleeces us by sneaking in a tax here, a tariff there, a duty here, a fee there . . . it's been reliably estimated that the average US consumer pays dozens of them every year.  (Here's a list of 47 common taxes;  and this 1992 article from the CATO Institute shows how tax affects buying a vehicle, greatly increasing the effective price you pay.  Adjust the vehicle prices and taxes to today's figures, and the picture's even worse.

I'm obliged to the Daily Beast for revealing yet another consumer rip-off.  Hopefully this one is dying a natural death even as we speak.  It can't happen too soon!



Old NFO said...

Even dedicated sports nuts can't watch enough programming to have it make sense... sigh

Bob said...

I had a "bundle" of telephone, TV and internet being provided to my home. Recently I realized that it was costing me over $2,000/year for all that, and I do not watch even 1% of all that sports junk. There were a couple dozen Spanish channels, a wad of cooking channels, more than a dozen "auction" channels, and a bunch of tent preacher channels, NONE of which I watched.

MY internet came in of the phone line, a "high speed" (LOL) service, about 1meg download and 300K upload.

I recently dumped it all.

I got basic, basic, basic telephone service for the alarm system, went to Walmart and bought an "air" antenna which sits under the TV, and had a local internet provider hook me up with a decent package, 10meg download, 300k up.

All at less than one-third of the amount I was paying.

The TV had news channels, about all I ever watched, a few Mex channels, ONE auction channel, and - to my surprise - three Asian channels, but it's now all free.

If I want to watch the whatever sports event that's hot for the day, I just go to the local Chilis restaurant, sit in the bar, have a beer or two, and have a great time with all the other locals.

Goodbye forever to those thieving "profiteers". May they all live interesting lives.

Bob said...


Wrong tense.

"The TV had news channels, about all I ever watched, a few Mex channels, ONE auction channel, and - to my surprise - three Asian channels, but it's now all free."

Meant to say the "TV HAS news channels...."

Anonymous said...

Another bundle component - Al Gore was earning $0.21 per month per subscriber for Current TV, from being bundled with the rest of the cable TV offerings. This came out when he sold Current TV to Al Jeezerah for $500M dollars. I wondered at the time how many people knew that their money was helping Al "global warming" Gore get rich, without having any choice in the deal and also without ever watching it.

For myself, I calculated how much money I was spending on cable TV, cut the cord, and haven't looked back. YouTube & the internet have satisfied whatever entertainment needs I've had.

-- Steve

Gorges Smythe said...

If the providers would let us pick our own, my bill would probably go from $65 to about $10. I guess that explains THAT!

lpdbw said...

I bought a Roku, dropped phone and cable, and subscribed to Netflix, Amazon Prime, and Hulu.

Much cheaper, and more stuff to watch than I have time for.

Since I watch what I want, when I want it, I'm not tied to broadcast times or even setting up a DVR.

drjim said...

When I worked for DirecTV I got *everything* except the adult channels.

When I sat down to customize my program guide (remove the stuff I didn't, and would never, watch)I was stunned at how many garbage channels we were broadcasting.

I mean choice is nice, but there were probably 15 or 20 shopping channels, and at least that many religious channels.

I won't go into the foreign language channels because if you have customers that speak those languages, they'll want programming.

And don't get me started on the sports channels.....

Besides free over-the-air (old fashioned) TV, you can also buy an inexpensive satellite receiver and dish antenna, and receive hundreds of free-to-air satellite programs.

Tal Hartsfeld said...

I've always known cable/satellite TV providers to have an excess of "throw-away" channels I have no interest in watching or viewing, and that the inclusion of such is part of the overall price of said service.
I'm surprised it took you people THIS long to finally notice or figure this out.

Magson said...

In re: Car dealerships --

There's an "Adam Ruins Everything" clip about that, and after pointing out that the dealerships are really unnecessary in this day and age he's asked the obvious question of why our legislators aren't repealing the dealership laws. The answer: Car sales account for nearly 25% of all local sales tax revenue. the "legislator" then says to the dealer "You own me!" Clip is about 3.5 minutes.

Well Seasoned Fool said...

Pulled the plug on the TV four years ago. Don't miss it. Pay too much for my Internet connection but my choices in this area are limited.

CPAP? Been using one since 1995. When I need a newer one, go on Craigslist. There are now models that automatically adjust. Works for me.

The Internet for cars? Yes, if you have great credit. Based on thirty years in the business, I would say most people don't. While I don't use them for car purchases, AAA (Auto Club) does a decent job and their mark up if far less than dealers.

David Lang said...

the problem with getting rid of the 'junk' channels is that the list of which channels are junk varies from person to person

until we have the ability to get everything unbundled and, selecting just the channels we want, there is no good way to get rid of 'junk' channels.

That being said, cases like the sports channels where there is one entity collecting a substantial amount of money for the bundle of channels seems to be to be exactly the sort of thing that the cable/satellite providers are going to unbundle, it helps them in their marketing if they can say they are cheaper.

Gordon said...

When I got my CPAP I was told the cost was $800, exclusive of the sleep study. But the gal told me I could buy a returned machine (a fair number of folks never manage to sleep with one) for about $200. The difference, I figured out, was the cost of having the sleep center staff go over how to use it and such.

Medical devices are a racket. Everything that's "prescribed" costs at least double what you would pay on the free market.