Cable Companies Changing Tune On 'A La Carte' > Disney/Espn key driver on this.

said by cdru:

The issue though is that the subscription fees that get sent back to ESPN now could not be maintained without a huge fee increase for those that would pay the premium.

For illustration, say there are 60m basic cable subscribers with ESPN usually in the basic tier. I've seen EPSN per-subscriber fee anywhere from $3.20 a few years ago to recently $4.69. Lets take an average and say $4/subscriber. That's $240 million/month or $2.88 BILLION per year.

Well under 20m tune in to ESPN on a weekly basis. So if you are going to start charging people for the ESPN tier, ESPN is going to have to charge 3x the price, or $12 per subscriber. $12 is likely to price the channel too high for the casual fan as the majority of those 20m fans are there only for Monday Night Football. Subscription rates would drop to 15m minimum and 10m I don't think would be unreasonable. So it's going to be closer to 4-5x the cost, or approaching $20/subscriber. At $20/month, you haven't killed the channel, but you've maimed it.

said by cdru:

It's not actually one channel. For ESPN, it's usually their entire block of channels: ESPN, ESPN2, ESPN News, ESPN U, etc.

And I agree with you, to a point. ESPN is an extreme example, but the same thing applies to most channels though. Everyone pays for channels that only a subset of subscribers watch or really want.

If everything went to a pure a la cart basis, you would only have a fraction of the channel selection that you have now as many channels wouldn't have the financial backing to stand 100% on their own. For those that do, you probably are going to pay more of that 1 channel then what that one channel really cost when it was part of a bundle. So you end up paying more for that channel for less.

In principal, a la cart sounds great, but realistically I don't think it's viable long term while still keeping the majority of channel options that we currently have.