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story category Cable Execs Tell Martin to Forget A La Carte
Programming heads urge him to focus on DTV transition instead
03:21PM Wednesday Apr 16 2008 by KathrynV
tags: prices · fcc · business · cable
In a letter to FCC Chief Kevin Martin yesterday, the heads of several cable programming networks urged him to stop considering a la carte pricing as a requirement for the cable industry. Representatives from ESPN, MTV, FOX, Turner, Disney and Univision all added their two cents that the move would penalize popular networks because customers would no longer be able to afford to pay for them. In essence, they told Martin that they think he should drop the issue and encouraged him to turn his focus instead to the DTV transition; they reminded him that was something that Congress had strongly suggested he do already. The complete letter can be read here.

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Forums » Cable Execs Tell Martin to Forget A La Carte
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bugabuga

join:2004-06-10
Austin, TX

As usual

Panic and horror. Except a la carte is not mandated to replace standard "buy a bucket of sh... and dig in it for your diamonds" programming packages. Simply would be offered in addition to.
But customers should not concern themselves with such irrelevant details.
Bleh.

p.s. diversity is nice, as long as it's not sponsored out of a pocket of someone who won't benefit from it.
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Camelot One
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Re: As usual

Oh come on now. If we weren't forced to subsidize channels like WE, BET, and Oxygen, they couldn't stay on the air! No one is going to pay for that crap. But as it is, the 3 people who want to watch those channels can, thanks to the combined pool of all of us.
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beaups

join:2003-08-11
Hilliard, OH

Re: As usual

really this is wild economics...if people were to pay by channel...and a channel could not survive because not enough people want it...then it should die, no?

I mean, if I sell a product that is not profitable unless I force people who DO NOT WANT IT to pay for it anyways...isn't something wrong with my business model??? lol

pnh102
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Re: As usual

said by beaups See Profile :

really this is wild economics...if people were to pay by channel...and a channel could not survive because not enough people want it...then it should die, no?
Didn't they say the same thing about certain banks?
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I mean, if I sell a product that is not profitable unless I force people who DO NOT WANT IT to pay for it anyways..
Sounds like Microsoft's business plan for Vista.

en102
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join:2001-01-26
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There's 2 sides to this issue:

1. I agree that a la carte and bundling should be available. 2. Prices will increase, and probably 3/4 of the channels would disappear or become too expensive.

TV (cable, satellite, FiOS, etc.) are all based on the following:
a) Management wants a minimum of ~$40 from you to support TV service. They currently want as much from you as you are willing to pay.
b) Management has to PAY for some channels... others (HSN, Shopping) are basically 'free', and others are sold - bundled by big media (Disney, ABC, ESPN, Big10).

Why not have a pseudo a la carte?
Basic package = x ($35-$40 range to keeps the basics happy), then a la carte and bundles after that ?
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Camelot One
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Clearly I should have used the "sarcasm" tag, as my bold examples weren't enough to relay it.

dvd536
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said by beaups See Profile :

really this is wild economics...if people were to pay by channel...and a channel could not survive because not enough people want it...then it should die, no?
YES! then that would free up bandwidth for channels people DO want
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Re: As usual

said by dvd536 See Profile :

said by beaups See Profile :

really this is wild economics...if people were to pay by channel...and a channel could not survive because not enough people want it...then it should die, no?
YES! then that would free up bandwidth for channels people DO want
Sadly, IF that were to happen, we'd have the "Survivor" channel, the "American Idol" channel, and 22 addition channels for their spin offs, running the shows 24/7.
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edit:
April 16th, @04:09PM

said by Camelot One See Profile :

Oh come on now. If we weren't forced to subsidize channels like WE, BET, and Oxygen, they couldn't stay on the air! No one is going to pay for that crap. But as it is, the 3 people who want to watch those channels can, thanks to the combined pool of all of us.
That's ignorant to say no one would subscribe to those channels. The world doesn't revolve around what you like (read:you have no girlfriend or kids).

That being said, content providers know that few people would subscribe to all of those channels without them being bundled. Most of those extra channels are just extra revenue streams since they charge per subscriber.They can hold cable and satellite companies hostage by forcing them to take the extra if they want to provide popular channels.

If cable companies want MTV or BET, they have to take 4 other MTVs and BET Jazz. Want CNN, you have to get CNN International, TruTV, Headline News, and CNN World. Don't even get me started on Disney with their channels and ESPN. Content providers are the REAL reason why everyone's cable bills keeps rising.
bugabuga

join:2004-06-10
Austin, TX

So? If they can't get enough paying public the question becomes where does it end. Five channels? Twenty? Fifty? Where do you draw a line of subsidies and why exactly there.
For example I don't want to subsidise five shopping channels and five religious channels.

Biggest fear of small channels is that advertisers will know exactly how many people subscribe and watch them, and slash their rates (because they can't claim everyone who signed up for an extended cable package to be "semi-regular viewer").

Again, for those who like the idea of helping out small channels, packages would be available like before. Nobody forces you to switch to a-la carte, if you don't want to.
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PaulHikeS2

join:2003-03-06
Merrimack, NH

Re: As usual

said by bugabuga See Profile :

For example I don't want to subsidise five shopping channels and five religious channels.
I realize this is just a small portion of your point, but you don't subsidize them. Those channels actually pay the provider for carriage. In effect, they subsidize your bill.
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nasadude

join:2001-10-05
Rockville, MD
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Re: As usual

said by PaulHikeS2 See Profile :

I realize this is just a small portion of your point, but you don't subsidize them. Those channels actually pay the provider for carriage. In effect, they subsidize your bill.
bzzzzzzt! wrong answer. Every time cable bills go up, the cablecos blame it on the increased cost of programming.

if Disney jacks up the rate of their new "bundle" because it includes a program nobody wants to watch, the cost gets passed straight on to you know who.

in the DC area, the comcast sports network was refusing to carry the Nationals games because 1) transmission rights were owned by another group (the real reason they bitched) and 2) they claimed they would have to raise rates (the truth? who knows). The pressure was too much, comcast caved, then promptly added $1.50 to every local customers bill.

no subsidizing going on for us, we're the marks in this carnival.

PaulHikeS2

join:2003-03-06
Merrimack, NH

Re: As usual

You apparently didn't read the post. It was referring to shopping and religious channels only.
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hottboiinnc
Kyle

join:2003-10-15
Toledo, OH

Re: As usual

You don't pay for the shopping networks. THEY pay the cable companies to be carried.

PhoenixDown
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Yeah and it would be hard for the cable companies to explain their rate hikes when you decide to leave all the sports packages out!
BF69

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Camden, TN

said by Camelot One See Profile :

Oh come on now. If we weren't forced to subsidize channels like WE, BET, and Oxygen, they couldn't stay on the air! No one is going to pay for that crap. But as it is, the 3 people who want to watch those channels can, thanks to the combined pool of all of us.
"Thanks for the support"
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Thespis

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edit:
April 19th, @07:34AM

Let's see...
The public has a "right" to buy a product in whatever fashion they choose, but the producer of the product doesn't have the right to sell his product in the manner he chooses.
All this talk about free market economics and letting channels die if nobody watches them, but nobody blinks at the notion of making laws to force a content producer to market his product in a specific way.
What country is this again?

Skeedatl
Ah, push it - push it real good
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Surprised?

Cable seems to love channel extortion. Nothing gives them glee like forcing you to buy 100 channels you don't want in order to get the 1 channel you do want.

TK Junk Mail
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Re: Surprised?

said by Skeedatl See Profile :

Cable seems to love channel extortion. Nothing gives them glee like forcing you to buy 100 channels you don't want in order to get the 1 channel you do want.
The BBR headline is misleading. It wasn't the cable company execs, but the Hollywood content providers that sent this letter. And, of course, they don't want a la carte because it is they who force cable companies to pay for channels hardly anyone wants in order to get the popular channels.

Martin, with his head up his ass as usual is going after the wrong parties to force a la carte. He is sticking it to cable companies, when he should have been sticking it all along to Hollywood. Of course, there is the little matter of the fact he has no power over them. So he tries to score cheap political points by making scapegoats out of the wrong group.
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Corydon
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Re: Surprised?

Still, forcing the cable companies to offer à la carte would provide them with the cover they need to stand up to the content providers. They couldn't be held hostage by the threat to deny access to ESPN or other networks.

I am kind of curious how the pricing scheme would work out. Presumably, all of the local must carry channels would still be must carry. Would everyone get charged the same basic rate with an additional single monthly charge for each extra channel they wanted?

Also presumably, this would require that all of the premium channels (everything but your must carry locals) would all have to move to digital, so you could turn them on or off remotely one by one. This could be a bonanza for the cable companies—they get to free up a lot of spectrum AND they get to rent a lot more set top boxes and they get to blame the FCC for it!

So why again are the cable companies resisting this? Perhaps it's because many of them are in the content business themselves?
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Kyle

join:2003-10-15
Toledo, OH

Re: Surprised?

cable co's do have the power to stand up to the content providers but that doesnt mean you'll be watching tv.

tiger72
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not sure why everyone blames cable. Agreements between content providers and cable cos often are multi-channel deals that require a lesser-known station be carried so that the far more popular consumer-demanded channel can be carried.

Plus, how much do you think you'd pay for each channel if every channel were a la carte? I guarantee you'd pay more for each individual station than you would for a typical cable package. I can also bet that channels like NBC and ABC would put their popular shows on cable after a viewer base has built up, so as to increase their own revenue.

A la carte is not a solution to high cable/satellite prices.
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edit:
April 16th, @04:10PM

Re: Surprised?

said by tiger72 See Profile :

Plus, how much do you think you'd pay for each channel if every channel were a la carte? I guarantee you'd pay more for each individual station than you would for a typical cable package.
A la carte is not a solution to high cable/satellite prices.
Depends on how many channels you want. This has already been done to death here a billion times but big dish a la carte pricing shows that a majority of popular channels run about $1 a month. It's primarily sports channels that cable forces upon basic cable subs that runs the bills up. And very rarely do cable operators protest. Rather they choose to just pass on these increases 2-3 times a year.

A la carte is the ONLY solution to high cable prices. With a la carte people have the option to buy only those channels they want. Instead of content creators like ABC being able to rely on channel extortion and channel welfare to get you to buy ABC Family, they would have to COMPETE for every single subscriber.

Meanwhile those who like packages would continue to buy these lame filler channels in bulk, just like you can with big-dish.

tiger72
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Re: Surprised?

said by Skeedatl See Profile :

said by tiger72 See Profile :

Plus, how much do you think you'd pay for each channel if every channel were a la carte? I guarantee you'd pay more for each individual station than you would for a typical cable package.
A la carte is not a solution to high cable/satellite prices.
Depends on how many channels you want. This has already been done to death here a billion times but big dish a la carte pricing shows that a majority of popular channels run about $1 a month. It's primarily sports channels that cable forces upon basic cable subs that runs the bills up. And very rarely do cable operators protest. Rather they choose to just pass on these increases 2-3 times a year.
$1 a sub is the negotiated "bulk" price which assumes x number of viewers (so that those channels can go on to tell advertisers that they reach x many households), etc... If the number of households reached goes down, advertising revenue does too. That means that content providers will likely raise their own rates to the consumer. Of course, the cable co will tack on an extra dollar per channel so that they can turn their own nice little profit.

So that a la carte $1 channel quickly creeps up to $3-5/chan. You don't have to watch too many channels before that adds up to the same that you're paying now for a far more diverse set of channels. And god forbid the cable/sat companies lock your channels in on an annual contract, and (for example) a show you watch on NBC gets pre-empted by sports, and gets moved to CNBC...
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Skeedatl
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Re: Surprised?

This has already been done before but if big-dish with as few viewers as they have can get those prices, certainly cable, if they chose to could do the same.

You're argument will be the price will go up with volume. That makes no sense.

PaulHikeS2

join:2003-03-06
Merrimack, NH

Re: Surprised?

said by Skeedatl See Profile :

This has already been done before but if big-dish with as few viewers as they have can get those prices, certainly cable, if they chose to could do the same.

You're argument will be the price will go up with volume. That makes no sense.
Where are you getting this pricing information? That is the basis of your whole argument. I've been looking at C-Band pricing information and I'm seeing prices of $3-$5/month for channels such as HGTV, Game Show Network, Lifetime movies and the like. It seems with the information out there most people would be paying a lot more with a la carte.
»www.callnps.com/alacarte.htm
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Skeedatl
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Re: Surprised?

CallNPS is one of the most expensive resellers. Search this site, there have been multiple threads with price quotes.

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edit:
April 16th, @05:28PM

»www.omegasource.com/c-band-big-d···ramming/

This site has you pick 5 channels to get the price.

Gameshow Network is $3 for 3 months of programming ($1/mo)
Comedy Central $4 for 3 months ($1.33/mo)
USA+Sci Fi $9 for 3 months for both channels ($1.50/mo/channel)
Weather Channel $5 for 3 months ($1.67/mo)
CNN+CNNi+HLN+Fox News $12 for 3 months $1/channel/month

They also offer a deal for $99 for a year and you pick 10 channels from their list of offerings which works out to $0.83/channel per month, but you actually get 10 channels you really want. I think that is better than paying say $0.33 per channel but having to buy dozens and dozens of channels you don't want.

Some channels are certainly higher but that is what is good about a la carte. People who only watch a few channels can buy the channels they want. Those that want more could bundle for savings.

So for people like me who only watch 6-10 channels I would do far better under a la carte rather than having to buy 2 or 3 tiers just to get the 6-10 channels I'm looking for.

PaulHikeS2

join:2003-03-06
Merrimack, NH

Re: Surprised?

Even on that site, the cheapest price if you want ABC, NBC, and CBS is $15.75/month. With cable I can get 20 channels including all locals (including Fox, CW, and PBS) for about $15/month.
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edit:
April 16th, @05:39PM

Re: Surprised?

So what, OTA I get HD broadcast nets for free.

No one is claiming a la carte is all things to all people. But I think people should have the CHOICE and be able to buy (a la carte vs bundles) that works out best for them.

Your $15 is for broadcast basic only? If you're only interested in broadcast basic and can't get them OTA, then you would opt for a bundle of networks. But you should have the choice.

PaulHikeS2

join:2003-03-06
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Re: Surprised?

said by Skeedatl See Profile :

So what, OTA I get HD broadcast nets for free.

No one is claiming a la carte is all things to all people. But I think people should have the CHOICE and be able to buy (a la carte vs bundles) that works out best for them.

Your $15 is for broadcast basic only? If you're only interested in broadcast basic and can't get them OTA, then you would opt for a bundle of networks. But you should have the choice.
I agree that choice is good, but anything outside of the tier that includes the local broadcast networks; which are regulated by the FCC and local authorities; are entertainment, and as such should not be subject to regulation by federal agencies, IMHO.
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said by tiger72 See Profile :

$1 a sub is the negotiated "bulk" price which assumes x number of viewers (so that those channels can go on to tell advertisers that they reach x many households), etc... If the number of households reached goes down, advertising revenue does too.
So why aren't the advertisers speaking up about this? Surely you'd be able to negotiate better prices (due to fewer people subscribing to each channel) while still reaching your demographic (you know the people buying a particular channel really want to watch it).

À la carte would seem to be a marketer's dream.
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Re: Surprised?

said by Corydon See Profile :

So why aren't the advertisers speaking up about this? Surely you'd be able to negotiate better prices (due to fewer people subscribing to each channel) while still reaching your demographic (you know the people buying a particular channel really want to watch it).

À la carte would seem to be a marketer's dream.
You're assuming that everyone who's interested in the channel would actually pay for it. Marketers target their demographic with their ads, but they don't want to limit their products to only that demographic. Casual viewers who watch one program on the SciFi channel are unlikely to purchase the channel for that one show, and will likely just watch something else. Those are potential viewers and buyers that are lost in the a la carte system. While advertisers would know their market better, they don't want to lose those casual viewers.
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UncleDirtNap

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The ridiculous argument that price per channels would increase in an ala carte offering assumes that consumers would be willing to pay for the channels at any price, which they clearly wouldn't.

The price per channel would be no more than the market would bear ... which is the way it should be.

tiger72
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Re: Surprised?

said by UncleDirtNap See Profile :

The ridiculous argument that price per channels would increase in an ala carte offering assumes that consumers would be willing to pay for the channels at any price, which they clearly wouldn't.
clearly? A basic rule of markets is that when you buy in bulk, you gain bargaining power and save money. Since when do prices not go up when people stop bargaining as a group?

The price per channel would be no more than the market would bear ... which is the way it should be.
This I absolutely agree with. I don't understand why you believe the market wouldn't allow the prices per channel to go up. Do you really think that the prices are at their peak and have no place else to go but down? If that's the case, the cable and satellite companies need to fire everyone who negotiates their carriage agreements.
--
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AZ_OGM

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edit:
April 16th, @04:11PM

Edit: You took the words right out of my mouth Skeedatl.

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edit:
April 16th, @04:14PM

Re: Surprised?

And you don't have to buy a year's worth those get those $1 rates. Typically, the sites I saw you paid quarterly (eg $3-4 per quarter). Of course some channels were more, but a lot like USA, Sci-Fi and Comedy Central are very reasonably priced.

The poster is right in that if you wanted a LOT of channels, bundling makes sense. But people like me only watch a dozen or less (none are sports) and my rates would be significantly cheaper a la carte.

It's like buying food. $50 for a ton of rice may be cheap, but when if you only wanted 1 small box. $50 isn't a deal if you don't need a ton of rice.
hottboiinnc
Kyle

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A la carte would not apply to satellite, AT&T or VZ. As they claim their not Cable companies. Only Comcast, TWC, Charter and alike would have to be a la carte. Which is first off not fair.

tiger72
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Re: Surprised?

said by hottboiinnc See Profile :

A la carte would not apply to satellite, AT&T or VZ. As they claim their not Cable companies. Only Comcast, TWC, Charter and alike would have to be a la carte. Which is first off not fair.
a very good point indeed.
--
"What makes us omniscient? Have we a record of omniscience? ...If we can't persuade nations with comparable values of the merit of our cause, we'd better reexamine our reasoning."
-United States Secretary of Defense (1961-1968) Robert S. McNamara

Phattieg

join:2001-04-29
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said by Skeedatl See Profile :

Cable seems to love channel extortion. Nothing gives them glee like forcing you to buy 100 channels you don't want in order to get the 1 channel you do want.
Well, I like finding something good to watch, even if it's on a channel I don't normally watch. I also find new things while channel surfing for something out of all the channels I pay for, and honestly, with a program guide, I find something to watch. Sorry you are limited to reruns and specific shows. Like a new book, you may find a new show you like on the channel you least expect. Oh well, I know if a la carte goes, so will some good channels, and thats sad. Plus a la carte will mean the cost of a single channel will go up in cost by a long shot. If you did the math, the channels you ocasionally watch give the provider revenue to make money broadcasting new shows while running ads on stations that play reruns.
beaups

join:2003-08-11
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Did I read the letter wrong???

"In essence, they told Martin that they think he should drop the issue and encouraged him to turn his focus instead to the DTV transition; they reminded him that was something that Congress had strongly suggested he do already."

I didn't see ANY such mention in the letter....
neufuse

join:2006-12-06
Indiana, PA

only channels ever watch...

are History and Discovery networks... I wish I could just get only them... I wouldn't care if it was $50 for them... would still be less then the $99 I pay now to get them in HD

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Re: only channels ever watch...

what provider do you have? I have TWC, and i pay $55 (including HD reciever fee) to get my HD.

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Re: only channels ever watch...

said by tiger72 See Profile :

what provider do you have? I have TWC, and i pay $55 (including HD reciever fee) to get my HD.
Time Warner has the most abysmal selection of HD channels. They don't even carry Discovery in HD. (The Discovery Channel, not Discovery HD)

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·RoadRunner Cable

Re: only channels ever watch...

said by MattE See Profile :

said by tiger72 See Profile :

what provider do you have? I have TWC, and i pay $55 (including HD reciever fee) to get my HD.
Time Warner has the most abysmal selection of HD channels. They don't even carry Discovery in HD. (The Discovery Channel, not Discovery HD)
Some divisions do have DiscoveryHD in addition to HD Theater. TW actually offer more HD than any other cable provider, and are 3rd place overall according tho this:
»www.avsforum.com/avs-vb/showthre···=1016467

While i'd love more HD, I'm glad the the HD channels I do have are mostly true HD and not HDlite, stretch-o-vision "HD", or 480i widescreen "HD". I see no point in having a bunch of bad HD stations which are HD in name only.
--
"What makes us omniscient? Have we a record of omniscience? ...If we can't persuade nations with comparable values of the merit of our cause, we'd better reexamine our reasoning."
-United States Secretary of Defense (1961-1968) Robert S. McNamara
goalieskates

join:2004-09-12
Knoxville, TN
·Comcast
·AT&T Southeast

and of those complaining

And of those cable networks complaining, I'd happily give up ESPN (a Disney company), MTV, Disney, and some of Fox.

So it wouldn't matter if I couldn't afford them, I wouldn't buy them. That's their real beef - they're considered "staples" and how would it look if people chose not to buy them.

AZ_OGM

join:2007-01-12
Phoenix, AZ

If some channels disappear...

So be it! I can recall a few channels that Turner has pulled the plug on because they couldn't compete with the incumbent. Anyone remember CNNSI or CNNFN? If a la carte happens, hopefully more channels will go dark. How many channels does the eMpTyVee empire have churning out crap 24/7? I shouldn't have to pay close to $65 for maybe 10 channels I watch which are Comedy Central, Dis