The Satellite/Cable TV Business Model

nospam@example.com (William Rookwood) — Tue, 29 Jul 2008 15:49:04 -0400

I was just thinking about the business model of Satellite and Cable TV operators and stations. The way it exists now, providers like Dish Network and Comcast actually have to pay channels they want to carry. Is it just me, or does this seem extremely backwards of how it should be?

The point of a TV channel is to make money on advertising, and the way to do that is to have viewers. You would think these channels would be paying the providers to carry them; or in the case of extemely popular channels, carrying the channel for free just so they can tell customers they have it.

Now, I know what you are thinking, if channels have to pay to be carried won't they start dedicating a lot more time to commercials? My answer to that would be for the FCC to pass new rules limiting commercial time to a certain amount of time (if these rules don't already exist). There would be exceptions for shows who's purpose is advertising (infomercials, QVC, etc).

Another thing that will not change would be the current rules for locals, local stations will continue to be carried without them having to pay anything.

It just seems to me that this would be more economical, lower the subscription prices of TV providers since they aren't having to pay a bunch of channels, and provide more choice to the consumer since they won't need to put channels in tiers as much as they do now. Also note in my plan, you will still have to pay extra for premium channels with few or no commercials like HBO like you do now, sorry!

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The Satellite/Cable TV Business Model