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!