CES 2013

Cable And Satellite Bundles Here To Stay

According to Verizon's Eric Bruno, bundling, rather than a la carte channel purchasing, works because consumers like it. “People know what they don’t want," he said, "they don’t necessarily know what they do.” For cable and satellite providers facing rising programming fees, there’s also a growing threat from online distributors.

Even though consumers are pushing back on rising cable and satellite fees, the selling of broadcast signals and cable networks in big bundles is unlikely to change, according to executives at two of America’s biggest bundlers, Verizon and Dish.

Bundling works because consumers like it, said Verizon’s Eric Bruno at a CES panel. It addresses their interest in different kinds of programming in a way that an a la carte offering does not.

“People know what they don’t want,” he said. “They don’t necessarily know what they do.”

David Shull of Dish agreed that the big bundle of is here to stay. “There is just no way from an economic standpoint, certainly within five years, that the top 50 rated channels are broken apart.”

To keep basic subscription fees from rising too sharply, he added, it may make sense to create “mini-packages” of genre-based programming and sell them to those who really want them.

For instance, he said, Dish has packaged outdoor sports networks and family-oriented networks into such packages and offers them for a few dollars each. They cost interested consumers a little more, but they are “able to come into the basic tier at a lower price.”

BRAND CONNECTIONS

Even with that, he said, Dish may have to make “hard choices” and drop some marginal networks. The satellite operator can no longer simply pass along the cost of programming , which is rising at a rate of 8%-10% a year.

The panel, which also included John Penney of cable programmer Starz, also addressed the likelihood for more competition to the established satellite, telco and cable operators from “virtual MSOs”– online distributors.

Bruno felt such competition was inevitable.

“I think the technology is ready, he said. “Now, it’s really more building the business model — a go-to-market model — around it. That is not a easy thing.”

Penney was less certain online distributors would emerge, noting that the high cost of high-speed data and programming for new entrants may give them little opportunity to established themselves in the market.

But he did not discount them entirely.

Asked if Starz and other programmers could deal with online distributors without antagonizing current customers, he gave a qualified yes.

The programmers would consider working with them if they can demonstrate that they have the wherewithal and a “go-to-market strategy.. to be real partners” and they would not be “disadvantaging in any way” the traditional business.

“Satellite and telcos were new players on all these platforms in a world that was completely dominated by cable for many, many years. Every cable network I know of substance and scale is on all of these platforms.”


Comments (2)

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alicia farmer says:

January 10, 2013 at 1:45 pm

What planet are these guys living on?

Jeff Groves says:

January 10, 2013 at 4:08 pm

Meantime, disgruntled customers continue to “Cut the Cord”.


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