Verizon's Cable-TV Bundle Hack Is Too Cheap to Be True
Instead of paying cable-TV providers for a bundle of channels that nobody watches, Verizon wants to reward content owners for the viewers who tune in to each individual station, a plan that should lower costs — yay! — but that the Time Warners and Viacoms of the market aren't likely to adopt. Under this proposed system, Verizon's FiOs operation would shift to an Internet-style model of content compensation, paying networks for "unique visitors," explains The Wall Street Journal's Shalini Ramachandrin. "If you are willing to give a channel five minutes of your time, the cash register would ring in favor of the programmer," Verizon's chief programming negotiator Terry Denson told the Journal. That kind of plan would seem to make a lot of sense for Verizon and other televisions distributors forced to pay ballooning licensing fees just to offer basic cable bundles, which include all sorts of channels nobody watches. Many shows get zero viewers, according to Nielsen ratings, and Verizon (plus viewers like you) still pay for them. So, in terms of value, at least for the distributors, a pay-for-play cable pricing scheme works. Of course, it doesn't sound like the kind of thing money-hungry cable companies and content providers will ever really like.
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Previous whisperings of similar big-cable bundling hacks have resulted in little progress. Time Warner Cable threatened to get rid of small channels that nobody watches but ultimately decided against it earlier this year. Cablevision attempted to negotiate itself out of some lesser known channel deals with Viacom, and when then didn't work, Cablevision sued, alleging that Viacom forced it into the bundle deal. The big companies that own the channels, you see, build their business model on charging in bulk — that's why they're big. And big companies that own sports network will hate Verizon's new bundling plan especially, because they use valuable sports programming to jack up prices more than anybody. Siphoning off the smaller, less watched stations, in whatever way, could lead to lost revenue — and fast. It would also reveal what a terrible deal both distributors and subscribers are getting.
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So, yeah, while Verizon's unbundling model sounds like a more equitable way to pay for the content inside your cable box, they're unlikely to foist it upon the biggest of TV-show providers or the cable-TV industry at large, and that's as sad a reflection on the slow-to-change television industry as it is on your wallet. You see, the new system wouldn't actually lower prices, Verizon's content dealmaker told the Journal — at best, he explained, the new model would "stabilize retail prices for consumers." In an ideal world for big content providers, the distributors would pay less to buy shows and channels... and still charge people the same amount to access it. Even then, this not-so-out-of-the-box mode of "disruption" probably wouldn't go anywhere. That is, unless, an outsider has something to say about it.
