More on the rising cost of programming

Yesterday, I wrote about retransmission consent and the alarming price increases being asked by local broadcast stations for carriage on cable and satellite systems. However, many other factors are putting more pressure on the rising cost of television today. One question I have received from a number of customers is about baseball's MLB Network. As many baseball fans know, we do not carry baseball's league-owned network. The fact is, the cost of providing sports is rising precipitously, so much so, that it's totally out of control.

More on MLB Network but first some background

It's hard to pinpoint the root cause of the sports-cost problem as there are many contributing factors. First, team owners are paying exorbitant salaries to some players. Second, owners and leagues are realigning and dividing their games on new, narrower networks, charging new rates for new networks without lowering rates for the older ones which are losing the programming. This practice puts tremendous pressure on the aggregator networks like ESPN which has to bid more and more for sports rights. And the networks, new and old, usually insist that distributors place them on widely-distributed tiers, like classic basic or the most basic digital tier. That forces cable and satellite companies to pay for (and, in turn, charge for) the narrowly focused channels for millions of customers who don't necessarily want them.

Simply put, we're losing the battle. When the NCAA teams think about realignment, as some are, they are doing so with one major thought in mind -- How can we make more money from the TV rights? Needless to say, how do they make more money? By making everyone pay more.

We, at Insight, consistently ask for the right to carry new sports networks on a new sports tier. That would give us the ability deliver new channels specifically to those who are interested in them.  Unfortunately, we are almost always turned down. As a result, distributors usually are faced with two choices -- take it or leave it.

Technology to the rescue?

MLB Network is a great example of how consumers can get the programming they want without unnecessarily putting more pressure on the cost of cable. To be clear, we would love to carry the network on a basis that would make it available to those who want it without forcing people to pay for it if they don't. 

In this case, consumers have a real alternative. Major League Baseball makes every single regular-season game available on MLB.com. However, it's true that watching a baseball game on your home computer isn't exactly the best viewing experience. To solve that problem, consumers can purchase a Roku box (I have one) and then subscribe to MLB.com for as little as $60/year. Using their high-speed Insight Broadband connection, baseball fans can watch thousands of games every season, subject to local blackouts, in standard or high definition picture quality. You don't even have to run wires to the Roku box, your home network will deliver the service to your TV set.

True, it's not the MLB Network itself but, clearly, having access to so many games is a decent alternative. And this story illustrates two major points. First, consumers have choices thanks to the vast capability of high speed broadband connections. And second, networks should give the same options to cable and satellite customers that they give to online customers -- pay for what you want and not for what you don't want.

It's only fair.

Comments

[Donad in NKy]

Give Michael credit. He still brings up HD, even though he walked away from his 6-month old promise to take care of NKy first. His analysis of sports programming costs is appreciated, though. I wouldn't mind seeing NBA.tv if that HD content actually exists (it may be just a website, I'm not sure).

[Brad Morrison]

To carry the argument further,I can use Hulu Plus,ESPN3 and stream Netflix all on my game consoles and ditch cable entirely.
Which seems to be a poor argument for a cable company to make.

[SN]

But that doesn't answer the question that us baseball fans have: Why don't you carry the MLB Network? Saying that I can watch the games on a Roku device is like saying I should get rid of ESPN and watch all of their sporting events on ESPN3.com. It isn't the same. I watch ESPN (and would watch the MLB Network) for their other content. I think this was a poor attempt at appeasing the customers who keep asking about the MLB Network. Not only are you progressing slowly in your lack of HD channels but your non-uniformed roll out of the HD channels is puzzling and maddening. Why do some areas have as many as 22(!) more HD channels than another area? Blame it on the bandwidth but your lack of movement in this area has caused a lot of subscribers to leave you for a much greater experience.

[ARGO]

Sounds like a opportunity for sites like hulu to do a secure subscription service. Actually, Insight could do a online pay service and broadcast to non-cable customers.

[Thomas]

currently as far as i know insight only limits the upload bandwidth the download bandwidth is uncapped my self being a watcher of streaming HD movies online the only time i got nasty little calls about using to much bandwidth was back in the napster and other open source p2p clients and they said i am using to much upload bandwidth i need to stop using p2p networks so i called up insight upgraded my internet speed to their fastest one currently the 20.0 soon i will have 30.0 and will get 50.0 when that rolles out later this year i don't think i will need the 100.0 for what i do unless something changes and insight dose what comcast and time warner have been talking about and broadcasting their channels over the internet personally as a employee of insight in northern ky i would love to see more international programming with the small but "international airport" on our back door step and with Toyota's main parts hub being up here as well not to mention that Toyota rents out 2 rather large apartment complexes to their employees that moved from japan mlb network is and would be a great channel to have on insights networks i just feel we should bring the channels that we already have to "all" our customers before we talk about adding new ones

[Bob Brown]

Mr. Willner,
Are you endorsing the concepts of "A La Carte" cable subscriptions and also "cutting the cord"?

Wouldn't that cause high usage of all cable comapnies' broadband connections? Some of your cable/telco brethren have talked about(or instituted) usage caps on customers. Would Insight adopt a No Cap pledge?

[John in Lexington]

Before the start of MLB this season I paid for MLB.tv, and while I love being able to watch so many games, the service is not a replacement for the MLB Network. First and foremost, with MLB.tv you don't get the MLB Network-specific content such as the in-studio analysis and break down of each day's games, interviews with players, and whatever else it is they have on the network. I don't know because I've never seen MLB Network other than occasionally when I'm at a sports bar watching baseball and they're showing the game on MLB Network.

Secondly, and more crucially to me, MLB.tv is still subject to broadcast blackouts. Living in Lexington and being a Cincinnati Reds fan, I'm in the Reds' broadcast market and thus all their games are blacked out for me on MLB.tv so long as I'm in Lexington and not on a road trip somewhere else in the country. Where this has been a huge problem is when the Reds have afternoon games this season. Afternoon games are only shown on MLB Network and not Fox Sports Ohio like evening Reds games. Since Insight doesn't have the MLB Network I can't watch the game on TV, and even though we don't get the broadcast we're still subject to the broadcast blackout and thus have no way of watching the game live at all.

These are the issues I have with not having the MLB Network on Insight. I can empathize with the escalating cost of sports programming and the difficulties with not being able to have an a la carte sports tier, but it doesn't make it any less frustrating for me as a consumer to not have the MLB Network while many many other people do.

[Insight Customer in Louisville]

"And second, networks should give the same options to cable and satellite customers that they give to online customers -- pay for what you want and not for what you don't want."

That sounds a bit like an endorsement for a la carte programming from cable companies...

Kidding aside, and speaking as one Roku owner to another, I am glad to see a cable executive explain that the cable industry takes "over the top video" fairly seriously. But there's programming I'd rather get from Insight than by having to cobble together a solution using broadband. The best example I can think of now? Insight doesn't carry Versus HD, so we cannot see the Tour de France in HD unless we pay Comcast-owned Versus and get it directly from the web, or switch to DirecTV.