Study: Only 14 Percent of Cable Customers Satisfied; 73 Percent Want a la Carte

Study: Only 14 Percent of Cable Customers Satisfied; 73 Percent Want a la Carte

PwC finds that though customers want changes, they aren't willing to pay much for them: "With TV in such a state of flux, companies must revisit their business models," says PwC analyst Matthew Lieberman.

A la carte television programming is a popular concept among consumers who presume they'd save money by ditching channels they don't watch, but given that only 38 percent would be willing to pay more than $3 per channel each month, it's not likely the idea will catch on with TV providers who aren't inclined to stray from bundling. Not at that price.

Hollywood, Take Note: Here's What TV Viewers Really Want (Guest Column)

Viacom CEO Philippe Dauman Doesn't Expect A La Carte Cable Law

A new study out Wednesday from PricewaterhouseCoopers says that 44 percent of consumers would like a total a la carte system and that 73 percent of consumers would prefer a la carte or at least more customization of packages than is currently offered. Only 14 percent are satisfied with the status quo.

When it comes down to it, though, even customers who want such changes aren't willing to pay much for them. Sixteen percent, for example, say they won't pay more than 99 cents a month for a channel they want, while 24 percent will pay $1.99 and 22 percent will pay $2.99.
At $8 a month per channel, the highest option offered in the PwC survey, only 5 percent say they'd pay up.

The survey also indicates that 57 percent would not pay more than 99 cents a month for access to an individual show each month, while 20 percent would pay $1.99 and 12 percent would pay $2.99. Only 2 percent would pay $8 a month for a show.

Despite the lowly amounts that surely would be dismissed as unfeasible by distributors and content providers alike, TV executives would be wise to note the popularity of the a la carte concept, says PwC entertainment, media and communications analyst Matthew Lieberman.

GUEST COLUMN: Hollywood, Take Note: Here's What TV Viewers Really Want

"With TV in such a state of flux, companies must revisit their business models," says Lieberman. "The winners will be those that offer custom services or curate content in the most appealing ways."
For its study, PwC also held focus groups. "I have a bunch of channels that just sit there," one participant said. "If they could take them off and lower my bill each month, that would be great."
If given the a la carte option, 65 percent say they would subscribe to 10 or more channels, the most popular being basic cable offerings, followed, in order, by premium cable, sports, lifestyle, news, premium sports and children's programming.

The comprehensive PwC report also explores ways that consumers currently watch television, how they discover new shows and the amount of advertising they're willing to view in lieu of subscription fees. In regard to the latter, the rule is simple: The smaller the screen, the fewer the number of ads viewers will tolerate.

TV online is dominated by Netflix to the tune of 63 percent, while 49 percent go to the websites of the TV networks for their online viewing, 35 percent to Hulu, 28 percent to Amazon Prime, 25 percent to iTunes and 24 percent to HBO Go. Three percent go to Pirate Bay.

Only 14 percent say they prefer a web service for their TV viewing, but 31 percent acknowledge that the availability of Netflix, Amazon, Hulu and others decreases the value of television to them.
PwC found that 55 percent of TV viewers use their mobile devices while watching television and, of those, 56 percent use them for activities specific to a particular TV show.

Lieberman said focus groups revealed that consumers want more programming guidance from TV service providers. For now, 59 percent say they find new shows through recommendations from friends or family, 45 percent through channel flipping and 42 percent via advertisements. Only 4 percent discover new shows through social media.

Not surprising, DVRs are hugely popular, with 57 percent of consumers saying they record most of their shows for later viewing. Ten percent say they engage in "binge viewing" and 7 percent acknowledge that they often record shows but never watch them.

PwC surveyed 1,008 U.S. consumers ages 18 to 59. Seventy percent of the respondents have cable TV, 41 percent have Netflix, 26 percent subscribe to satellite, 18 percent use Amazon Prime, 16 percent use iTunes and 8 percent use Hulu.

"This study shows that during the next five years, an even greater portion of viewing of and interaction with TV and film content will take place on multiple screens and devices," says Lieberman. "Hollywood must adapt accordingly."

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Cable operator Mediacom blasts FCC...

A major cable operator has blasted the Federal Communications Commission
for not taking an active role in trying to keep programming costs down.
>
> In a letter to FCC Chairman Julius Genachowski, Rocco Commisso, the
> chairman and chief executive of Mediacom, a New York-based cable operator
> with about 1.14 million subscribers in 22 states, criticized the regulatory
> agency for not being aggressive in trying to keep programming costs down.
>
> "I am deeply disappointed with the Commission's lack of interest in keeping
> multichannel television services affordable," Commisso wrote. "Content
> owners have been unwilling to exercise the slightest measure of
> self-restraint, and are emboldened by the Commission's unwillingness to even
> try to impose some limits or speak out against programmers' practices."
>
> Commisso said that by not acting, the FCC has "cost Americans billions of
> dollars, as programming owners have increased their rates well in excess of
> inflation."
>
> Much of Commisso's beef is about having to pay broadcasters more in
> so-called retransmission consent fees to retransmit their local television
> stations.
>
> "It is especially shameful that retransmission consent fees have
> dramatically increased even as movies and sports events migrate from
> broadcast channels to pay networks and broadcast stations severely cut staff
> and budgets for news and public affairs programming," Commisso said.
>
> The veteran cable executive is also upset with the way cable programmers
> bundle their popular and unpopular channel together so distributors have to
> carry them all on the most widely distributed programming tiers.
>
> "Subscribers are forced to pay for channels they do not want," Commisso
> told the FCC.
>
> Commisso said the growing cost of programming is hurting Genachowski's
> efforts to provide broadband to low-income homes and that a "digital divide"
> is being created as prices rise "beyond the means or more and more
> Americans."
>
> Remedies Commisso pitched include designing an a la carte system that would
> give consumers more control over what channels they get. He also wants more
> transparency, including the ability to require broadcasters and cable
> networks to make public what they charge distributors to carry their
> channels.
>
> "Right now I'm just a collection agency for the programming community,"
> Commissio said in an interview. "We take the brunt of the criticism because
> we send the bill to the consumer."
>
> Thank you Hollywood Reporter
>
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Cable operator Mediacom blasts FCC...

A major cable operator has blasted the Federal Communications Commission for not taking an active role in trying to keep programming costs down.

In a letter to FCC Chairman Julius Genachowski, Rocco Commisso, the chairman and chief executive of Mediacom, a New York-based cable operator with about 1.14 million subscribers in 22 states, criticized the regulatory agency for not being aggressive in trying to keep programming costs down.

"I am deeply disappointed with the Commission's lack of interest in keeping multichannel television services affordable," Commisso wrote. "Content owners have been unwilling to exercise the slightest measure of self-restraint, and are emboldened by the Commission's unwillingness to even try to impose some limits or speak out against programmers' practices."

Commisso said that by not acting, the FCC has "cost Americans billions of dollars, as programming owners have increased their rates well in excess of inflation."

Much of Commisso's beef is about having to pay broadcasters more in so-called retransmission consent fees to retransmit their local television stations.

"It is especially shameful that retransmission consent fees have dramatically increased even as movies and sports events migrate from broadcast channels to pay networks and broadcast stations severely cut staff and budgets for news and public affairs programming," Commisso said.

The veteran cable executive is also upset with the way cable programmers bundle their popular and unpopular channel together so distributors have to carry them all on the most widely distributed programming tiers.

"Subscribers are forced to pay for channels they do not want," Commisso told the FCC.

Commisso said the growing cost of programming is hurting Genachowski's efforts to provide broadband to low-income homes and that a "digital divide" is being created as prices rise "beyond the means or more and more Americans."

Remedies Commisso pitched include designing an a la carte system that would give consumers more control over what channels they get. He also wants more transparency, including the ability to require broadcasters and cable networks to make public what they charge distributors to carry their channels.

"Right now I'm just a collection agency for the programming community," Commissio said in an interview. "We take the brunt of the criticism because we send the bill to the consumer."

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FCC order angers cable industry...

A robber dressed in drag angles toward a window at Norms Restaurant in Burbank and whips out a gun. Within a few seconds, the burly-looking guy behind the cash register yanks the criminal through the window, slams him against a countertop and repeatedly pummels him as he crumples to the ground.

The scene was based on surveillance video of an actual robbery and was recently filmed on Magnolia Boulevard for Fuel TV's "Punk Payback." The aptly named reality TV series, starring former Ultimate Fighting Championship heavyweight champion Bas Rutten, showcases combat moves that help viewers avoid being "punked" on the street.

"It's part martial arts action, part comedy,'' said Greg Glass, president of BCII, which is producing the show. "It's very over the top."

"Punk Payback," which debuts in November, is just the lastest among an onslaught of new reality TV shows that have kicked into production in Los Angeles this summer.

Since early July, about 50 new reality TV shows have pulled permits to film on local streets or non-certified soundstages, according to data from FilmL.A. Inc.

While reality TV production slowed in the second quarter — it was down 13% compared with a year earlier — activity has rebounded this summer with a crop of new and returning shows.

The flurry of activity is a reminder of the American public's seemingly insatiable appetite for so-called reality TV, much of which is scripted, and how the industry remains a key driver of local TV production even as other types of television production decline.

Fewer one-hour dramas are shot locally in part because of rising competition from other cities outside of California.

"We're grateful to have it [reality TV], but we'd also like to see more scripted programming, which has a higher economic impact," said Philip Sokoloski, a spokesman for FilmL.A., which handles local film permits.

In addition to "Punk Payback," other new shows include "Shahs of Sunset," a Bravo! series produced by Ryan Seacrest about a group of affluent young Persian American friends living in Los Angeles; "Dance Moms," a Lifetime show that centers on a demanding dance company instructor and her students; and E! Entertainment's "Dirty Soap," which follows the personal lives of soap opera actors.

Then there's "Barbies Reality," which spotlights the drama surrounding a party rental hall in South Central Los Angeles. The show's producer, Hue Hollins, who owns the rental facility, hasn't sold the show yet, but he's confident he'll find a buyer from a cable channel such as True TV.

"There's enough madness going on at the facility that it would make for good television," he said. "It's a pretty open market, and we feel like if we can come up with something that's interesting and good, we shouldn't have any trouble selling it."

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German Cable Companies Back in Black...

Little sign of cord cutting as Kabel Deutschland and Kabel BW report strong first half results.

COLOGNE, Germany - Cord cutting? What cord cutting? First half results from Germany's Kabel Deutschland (KDG) and Kabel BW provided further evidence that, in this territory at least, cable remains king. Both companies booked strong revenue and profit growth. Sales at market leader KDG were up 5.8 per cent year-on-year to $592 million (€412.1 million) and the company turned its $3.5 million loss in H1 2010 into a $12 million (€8.5 million) net profit. While the total number of KDG customers slipped slightly, to 8.7 million from more than 8.8 million a year ago, more Germans signed up for KDG's broadband, telephony and pay-TV services, boosting revenue overall.

John Malone's Liberty Global Buys German Kabel BW for $4.5 Billion

It was a similar story at regional cable operator Kabel BW, which saw revenues jump 10.7 per cent to $431 million (€300.2 million) and pre-tax profits top $144 million (€100.4 million), a 28.4 per cent increase. Again it was premium services driving the numbers, as pay-TV subscriptions jumped 39 per cent to 324,000 and broadband/telephony subscriptions were up about 25 per cent to 740,000. Kabel BW even managed to increase its total customer base, adding 48,000 new subscribers to make nearly 2.4 million overall. John Malone's Liberty Global bought Kabel BW in a $4.5 billion deal earlier this year.

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Revenue streams add up for cablers...

Does cable have it too good?

The industry's top execs would never say so, and certainly they have their own dragons to slay. But at the Variety Entertainment & Technology Summit "State of the TV Business" panel on Monday, it was hard to avoid the conclusion that while broadcast nets are trying to reinvent the wheel, cable is giving its tires another coat of Armor All.

"We have a better business model," Comcast Entertainment prexy-CEO Ted Harbert said. "It's not (broadcast's) fault. They didn't do anything wrong. They've got a single revenue stream, which will change soon thanks to retrans, which it should, because they do deserve retrans fees, so that will make it more of an equal playing ground. But there are several other things that cable does well that allows us to have a profitable business model."

"The facts are the facts," Harbert added. "We deliver a very significant profit, and most broadcasters don't."

With the broadcast networks focused on imminent pilot decisions, Harbert was joined on the panel by Lionsgate TV president Kevin Beggs, USA original programming prexy Jeff Wachtel and Turner programming head Michael Wright. Pilots remained part of the conversation, as evidence of how broadcast can be bogged down by a process that cable nimbly works through.

"For every 'Two and a Half Men' and now 'Big Bang Theory' that's going to make hundreds of millions of dollars -- that sets the bar, and that's the expectation," Beggs said. "So it becomes difficult on the selling side, but then you have to create a financial model going in that makes sense ... because it's so expensive to make a broadcast show that you're in such a deficit you can almost never get out of it.

"The way we engineer it is we want to be break even or profitable going into every show ... and then, wild success, if we get eight seasons in cable and can sell 100 (episodes), or the homevideo becomes something special as it has been for 'Weeds' and 'Mad Men.' Then you're actually seeing real value. But just depending on the back-end sale is very tricky these days. We can't hope that that's going to happen."

With confidence in their fundamentals, the cablers are essentially tinkering now, whether with the ratio of original to acquired programming or, as Wright suggested, pursuing more cable-to-cable programming deals.

"While it might not be a $100 million 'I'm gonna go buy a mansion' payout, it's a revenue stream," Wright said.

For all the talk about broadcast and cable dichotomy, Wachtel said the conversation is already beginning to change.

"I think we're in the big moment right now," he said. "There's something going on in the way the next generation processes information (and) processes entertainment that everybody talks about. ...So maybe people won't be talking about broadcast vs. basic vs. premium.

"Probably over the next few years, the broadcast networks all have to figure how to handle this extraordinary R&D expense and this lower ratio of success, and figure out a way to increase that ratio of success," Wachtel said. "And if that means programming fewer hours, maybe that's it."

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German Cable Companies Back in Black...

Little sign of cord cutting as Kabel Deutschland and Kabel BW report strong first half results.

COLOGNE, Germany - Cord cutting? What cord cutting? First half results from Germany's Kabel Deutschland (KDG) and Kabel BW provided further evidence that, in this territory at least, cable remains king. Both companies booked strong revenue and profit growth. Sales at market leader KDG were up 5.8 per cent year-on-year to $592 million (€412.1 million) and the company turned its $3.5 million loss in H1 2010 into a $12 million (€8.5 million) net profit. While the total number of KDG customers slipped slightly, to 8.7 million from more than 8.8 million a year ago, more Germans signed up for KDG's broadband, telephony and pay-TV services, boosting revenue overall.

John Malone's Liberty Global Buys German Kabel BW for $4.5 Billion.

It was a similar story at regional cable operator Kabel BW, which saw revenues jump 10.7 per cent to $431 million (€300.2 million) and pre-tax profits top $144 million (€100.4 million), a 28.4 per cent increase. Again it was premium services driving the numbers, as pay-TV subscriptions jumped 39 per cent to 324,000 and broadband/telephony subscriptions were up about 25 per cent to 740,000. Kabel BW even managed to increase its total customer base, adding 48,000 new subscribers to make nearly 2.4 million overall. John Malone's Liberty Global bought Kabel BW in a $4.5 billion deal earlier this year.

Thank you Hollywood Reporter

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Industry News: Reality Television Is Killing Cable’s Scripted Renaissance..

What happens when networks pour money into quality television only to have viewers watch 'Real Housewives'

It's the equivalent of a star chef sitting in an empty restaurant while people across the street are pouring into a lousy fast-food joint.
These days, reality television is killing scripted fare.
It's a little bit embarrassing and a big bowl of sad. And, if you look at it in a certain light, possibly even shameful. Because right in the midst of an unprecedented influx of smaller cable channels getting into the scripted game, a noble but expensive decision, the audience is looking elsewhere. And the toll it's taking is a lot more painful than some coldly written blurb about ratings might lead you to believe.
Let us turn our brains off and watch Wipeout or Jersey Shore. This is an industrywide problem that plagues networks as well as cable channels. But the trend is worrisome — even if it turns out to be a phase — because it will not only lead to the loss of some very good series but also drive whole channels to ratchet down or eliminate scripted fare entirely.
See, it's a great time to be a viewer — until it's not. This notion of excess quality, almost unfathomable 10 years ago, is hard to fathom for people who run the networks and cable channels. If you pour money into quality and nobody shows up, it kills incentive. If nobody shows up, the best a programmer can hope for is a lucky rebound down the road (positive reviews, word-of-mouth, etc.).
On March 6, the space Western Firefly will make its off-network return/debut on the Science channel. In the pantheon of series that didn't make it but should have, rabid fans often place Fox's Firefly at the head of the list. That same night, A&E, a channel trying to re-establish a scripted presence, will premiere the drama Breakout Kings. Good luck with that. Not only do you have those Real Housewives of Orange County coming back for Season 6, but also the freak-tacular incongruence of Mike Tyson on Animal Planet racing pigeons, all in the same time slot. Recent history suggests A&E's newbie drama is in for a serious beatdown.
The network landscape is littered with series that couldn't draw an audience. Here are five quick ones from recent times: Arrested Development, Better Off Ted, Lone Star, Party Down, Veronica Mars. And here are three current ones fans should be very worried about: Chuck, Human Target, Lie to Me.
Perhaps the cruelest fate has befallen FX most recently. Terriers was a critically acclaimed series with a rabid fan base — just not nearly enough of one, and "therefore it became a beloved 13-episode miniseries," FX president John Landgraf told the nation's TV critics in January. Sadly, FX has another of those on its hands with the boxing drama Lights Out, a similarly acclaimed series that has whiffed on finding an audience — leaving a palpable sense of sadness and disappointment among Landgraf and his FX colleagues (not to mention critics). "Maybe we should make a show about a zombie or a sexy vampire who's trying to regain the heavyweight championship of the world," he says.
"In January and February of this year, there were 18 new original series premiering on basic and premium cable, 18 original series that were returning for their second, third, fourth, fifth season in basic and premium cable, and 16 new and returning series premiering on broadcast," Landgraf added. "So add all that up together, and that's 52 original series premiering in January and February."
An excess of choices? You bet.
"On the night that we premiered Lights Out, The Game on BET did an absolutely historic number. Tosh.0 (Comedy Central) came back with a massive number with young men. So let's say most of the African-American audience wasn't available; they were at BET, and there was some obviously young Hispanic and white audience that watched that show. Tosh.0 had a massive number with young men. And 16 and Pregnant on MTV had a massive number with young women. So in a way, what the broadcast networks have been facing is that as they try to aggregate a large audience, they get picked apart demo by demo by other stronger shows that are the first choice of those demos. And frankly, large cable networks or any program can suffer that fate now, and I think that's what happened with Lights Out."
Can the series be revived, perhaps relaunched on the back of positive feelings for The Fighter? Nope. Two weeks ago, Lights Out lost about 100,000 viewers — a scary drop for a series that was only pulling in about 800,000.
Luckily, FX has enough successful shows on the bench that these two high-quality misses won't deter it. But if cheap reality shows stay hot in the ratings, look for others to abandon scripted altogether.

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Industry News:FCC votes to reexamine its rules on negotiations between broadcasters and cable

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