Cable companies, networks mull smaller TV bundles

SUN VALLEY, Idaho Thu Jul 8, 2010 1:17pm EDT

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SUN VALLEY, Idaho (Reuters) - Cable operators and entertainment companies are talking about selling cheaper cable TV packages with fewer channels to attract and keep customers trying to save money in a weak economy.

The talks, which are still at an early stage, also could give cable companies an advantage in competing with cheaper Web TV services offered by companies like Google, Netflix and Apple.

Basic cable bills have ballooned in the United States over the years as distributors add more channels, usually negotiated with program makers. Basic cable packages typically have more than 60 channels and are priced close to $80 in some regions.

But with a tough U.S. economy, weak job market and competition for disposable income from telecommunications services like Internet access and mobile phones, cable distributors and program makers realize consumers may look elsewhere for entertainment as a way to save money.

"It would be a good thing if we could all figure out a way to have one or more smaller packages that would be attractive to people who can't afford bigger ones, especially if we could do it in a way that the entertainment companies are still able to finance the product," said Glenn Britt, chief executive of Time Warner Cable, the second-largest U.S. cable company.

Britt was speaking on the sidelines of the annual media conference held each year in the mountain resort getaway of Sun Valley, Idaho.

Its attendees include some of the top cable and satellite TV distributors such as Comcast Corp and DirecTV, as well as programmers like Viacom, Discovery Communications and Scripps Networks.

With basic cable in some cities closing in on $80 a month, some Wall Street analysts have warned the cable industry could harm itself by continuing to raise prices well ahead of the rate of inflation.

"I think this is a real concern, but it is also a negotiating stance with programmers to see if they can reduce affiliate fees overall," said Collins Stewart analyst Thomas Eagan.

The industry appears to have listened, but is in no rush to overhaul a revenue model that generates tens of billions of dollars a year.

"Talks are happening at some level, but not too seriously," said Britt.

One senior media executive at the event who spoke on condition of anonymity suggested there could be a gap in the market for video programing packages streamed or delivered via cable for about $25 to $40 a month.

"I don't think these early services are a substitute yet, but the cable guys have to always be mindful of tomorrow."

(Reporting by Yinka Adegoke. Editing by Robert MacMillan)

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Comments (8)
SGK12 wrote:
It’s too damn late! The glutinous cable companies will soon be a thing of the past. (They know this. That’s why they want your internet and your telephone.) The cable companies are putting themselves out of business because your computer will soon have everything you want. Goodbye cable — AND GOOD RIDDANCE!!!

Jul 08, 2010 2:34pm EDT  --  Report as abuse
42inPA wrote:
OK all you cable networks, raise your hand if you are willing to allow cable operators to move you off of their expanded basic service. Anyone? AMC? ESPN? CNN? TNT? Food Network? MTV? Versus? Local regional sports network? Anyone? Buehler? Buehler?

Jul 08, 2010 3:59pm EDT  --  Report as abuse
jeffKAGAN.com wrote:
Cable television prices have been on a consistent rise over the years. Prices double in about ten years, every ten years. This was a problem ten years ago when some people just wanted to save money, but today many people have to save money. Yet prices keep increasing.

Prices in other technology drop. Cellphones start out expensive and decrease as the years go by. Same with television and other electronics.

People pay less for cellular phone service, regular phone service and a variety of others.

This is what people expect, yet this is not what they get from their cable television service.

Investors love this since they see increased earnings. Customers hate this because they see no way out.

Competition from the local phone company and from satellite television and even new competition from the web should be decreasing the price.

It is not however. Not yet anyway. I have been predicting price decreases over the last several years, but it is just not happening yet.

The cable television business is alot more complex and involves many different industry sets. The end of the line wants prices to increase and they get it. Then the cable television companies have to collect from their customers.

So the system is not consumer centered. It does not react to the marketplace.

Perhaps we are talking about reworking the entire industry. Chances of that happening are more difficult.

jeffKAGAN.com

Jul 08, 2010 5:27pm EDT  --  Report as abuse
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