Analysis: Canadian cable TV's 'a la carte' menu begins to take hold

Thu Sep 19, 2013 12:49pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Liana B. Baker and Alastair Sharp

NEW YORK/TORONTO (Reuters) - A transformation in how some Canadian cable TV companies sell channels to consumers might be a sign of things to come in the much bigger U.S. market.

With "a la carte" pricing, cable companies are offering Canadians an alternative to "take-it-or-leave-it" bundles that effectively force viewers there - and in the United States - to pay for channels that they do not watch in order to get access to those they do.

The Canadian Radio-television and Telecommunications Commission pushed the change when the regulator "strongly encouraged" the introduction of more-flexible packages two years ago. And Canadian consumers seem to like what has been happening.

In the largely French-speaking province of Quebec, for example, industry sources estimate that 70 percent of viewers buy a very basic TV offering of mostly broadcast fare and then pay for small groups of cable channels from a long list ranging from Discovery Channel to BBC Canada.

Meanwhile, U.S. media companies are fighting the a la carte concept ferociously. Walt Disney Co, Time Warner Inc and others worry that subscribers will drop less-popular channels. And with fewer subscribers forced to pay for pricey channels like sports cable network ESPN, the cost will increase for viewers who want them, the companies say.

Needham Research estimates that a purely a la carte model would wipe out $70 billion in revenue for the U.S. TV industry and that fewer than 20 U.S. channels would survive if consumers had to pay for each one separately.

"The bottom line is that the Canadians are way ahead of the U.S. in this realm," said pay TV expert Jimmy Schaeffler of the Carmel Group.