Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
CASE ASSIGNMENT: CABLE TV PRICING Disconnecting Cable Channels from Pricing Bundles When people go shopping, the grocery store doesn’t make them buy broccoli if they are buying milk. Why then do cable  and satellite TV companies make people pay for channels they don’t watch, for example, highly targeted channels like  Home and Garden Television (HGTV), Spike, and ESPN? Congressional lawmakers are interested in the cable industry’s  answer to this question. Several lawmakers are pushing for legislation that would prevent the cable industry from forcing  consumers to buy a   prix fixe   menu of channels and would require the industry instead to offer a la carte service, or  individual channels, in lieu of traditional packages. And the idea is gaining popularity. This idea, and complaints about cable television service and rising rates, emerged at a Senate subcommittee  hearing where legislators pilloried the cable industry for being unresponsive to consumers. One senator went so far as to  say that cable subscribers “are being force-fed channels and features they don’t want,” and encouraged the industry to  give consumers a choice. Another warned, “Do something about your rising rates or you’re going to have trouble.” The  senators aren’t alone in their frustration. Bipartisan members of the Federal Communications Commission have also  signaled support for more personalized cable options. The industry, however, insists that such options will end up costing  consumers more. Fueling the debate is the spiraling price of cable TV service. According to a recent General Accounting Office  study, cable programming rates jumped at least 34 percent during a recent three-year period, far outpacing the general  rate of inflation. The report attributed higher cable rates at least partially to billions of dollars of investments made by cable  companies   in   original   programming   and   upgraded   technology.   Cable   companies   are  also   paying   more   for   sports  programming; such fees rose 59 percent during the same period because of the higher prices being paid to sports teams  and leagues to carry games. Unbundling cable channels appeals to some consumers who hope it would lower monthly bills and give them 
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/25/2010 for the course 1 1 taught by Professor 1 during the Spring '10 term at American College of Gastroenterology.

Page1 / 3


This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online