A Brief Observation of the Cable Television Industry

I am not lobbying for the cable industry but recently I came across several articles that were overly critical of that industry. They present companies such as Comcast and Time Warner as these evil cabals who are out to rape the consumer with high prices. They had many quotes from various cable customers who were expressing outrage over the costs of cable television service and other quotes from local lawmakers who were calling for reforms.

It was a good read and served its purpose. Sensationalism. Nothing draws the public in like a story highlighting evil corporations who exist solely to generate profits. And it seems that 9 stories out of 10 that concern the cable industry have a negative slant to them. And a lot of the information they present is factual, but not fully explained. You can point to rate increases, lack of programming choices or the fact that most cable operators offer packages or tiers of programming instead of allowing subscribers to pick and choose, so called "ala carte" programming.

Yes, these are the facts that are almost always presented but what is not shown is the reason behind these issues. They never take the time to explain how cable operators raise rates due to costs involved in maintaining a complex infrastructure or the fact that cable operators are distributors of entertainment and content, they are not the producers of it. Nobody explains to the public that cable operators must deal with the various studios and networks who produce and control the content. And often times, it is the networks and studios that dictate to the cable operators such as Comcast and Time Warner what programming they can offer and how to offer it to subscribers. It is not merely that the cable operators want to force you to take 10 channels of HBO and 6 channels of The Discovery Channel. It has to do with the fact that in order to negotiate reasonable rates, the cable operators must agree to bundle programming and not make it available ala carte.

HBO's sister network is Cinemax, so an example of the that network forcing programming is typically something like this. They tell the cable operators that if you just offer HBO you pay (and this is not a real figure) $1 million per year, but if you offer both HBO and Cinemax we'll give a significant discount. So what ends up happening is the cable operator agrees to this arrangement so that they in turn can offer better rates to subscribers. If operators like Comcast and Time Warner did not enter into these type of agreements then cable rates would be even higher.

So if you are truly looking at lowering cable television rates, a good place to start is not with the cable operators but with the studios and networks. They are the ones who have the controlling interests in the big picture. They dictate the terms. But really the bottom line is the fact that cable television and going to the movies are all forms of entertainment and they are not necessities of life. You do not need cable television to survive, it is an extra in life. Like taking a vacation or having dinner in a nice restaurant. Some people complain about paying to much but the indignation they show makes it seem like they think it is a right not an extra to have cable television. Keep that in mind next time you complain. And also realize that there are many aspects and players in the cable industry who influence pricing and content. Don't always be so quick to attack just the cable operators. They are simply the most visible face in the crowd.