By The TV Answer Man team
TV Answer Man, there’s something I don’t understand. Cable and satellite are losing subscribers because people are choosing to subscribe instead to individual services now available for streaming. So why doesn’t cable and satellite just offer all their channels like that, a la carte? That way, people could order what they want and pay for what they want instead of getting one of these big expensive bundles with lots of channels you don’t watch. — Jerry, Plano, Texas.
Jerry, that’s a great question and one we are asked quite frequently over the years. While the desire for a la carte programming is understandable, the reality of the television industry is far more complex, involving economics, contracts, and technological limitations. Consequently, pay TV services have consistently fought against efforts to force it to provide all a la carte programming, which would enable subscribers to only choose and pay for the channels they want. Here are seven reasons why they oppose it although consumers and politicians have called for it for more than a decade.
1. Content Costs
One of the main reasons cable and satellite operators don’t offer channels à la carte is the cost of content acquisition. Television networks negotiate contracts with providers, which often require providers to carry a network’s full portfolio of channels. These contracts come with minimum carriage requirements, ensuring that less popular channels get included in packages. When providers refuse to carry these channels, they may face penalties or lose access to more desirable content. Just this month, Charter’s Spectrum and Disney engaged in a carriage dispute over whether the cable operator could exclude ESPN from certain packages. That battle triggered a 11-day blackout.
2. Channel Cross-Subsidization
Television networks often package their less popular channels with their flagship offerings. This practice, known as channel cross-subsidization, helps networks offset the costs of producing and distributing less-watched content by bundling it with more popular programming. À la carte pricing would disrupt this model, potentially leading to the cancellation of smaller, niche channels that lack broad appeal.
3. Advertising Revenue
Advertising plays a significant role in the television industry, and many networks depend on ad revenue to stay afloat. Channels à la carte would likely result in fewer viewers for less popular channels, making them less attractive to advertisers. Networks might compensate for this by increasing ad rates, potentially driving up the overall cost of television for consumers.
4. Technical Challenges
Offering channels à la carte would also present technical challenges for cable and satellite operators. Current technology is optimized for the delivery of predetermined channel packages. Implementing a true à la carte system would require significant upgrades to the infrastructure and could result in increased costs for both providers and customers.
5. Contractual Agreements
Many channels have exclusive contractual agreements with specific providers, preventing other operators from carrying them. These agreements can be highly lucrative for both networks and providers, further complicating efforts to offer à la carte options.
6. Competitive Advantage
Cable and satellite providers are in fierce competition with streaming services that do offer à la carte options. However, providers often rely on bundling channels to differentiate themselves from these streaming platforms. By offering exclusive channel packages, providers hope to attract customers who want the convenience of having multiple channels bundled together.
7. Regulatory Constraints
Regulatory bodies also play a role in the inability to offer channels à la carte. In some regions, there are regulations that prevent cable and satellite operators from offering channels on a purely à la carte basis, in part to protect smaller and local channels that might not survive without bundling.
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