1 Over 100 million US HHs pay MSOs. For a network with a license fee of .40 and a penetration of 99 million homes, that’s $475 million per year.
If you were wondering what enabled the wide range of good programming on TV this decade: now you know.
2 Mad Men does a 1.9 on a great week, and costs roughly $2.3 million per episode. If there weren’t bundled cable channels, it would have never existed.
3 How much $ would most of us voluntarily forked over to subscribe to AMC or FX or SyFy before their hits showed up? An honest answer will show that if not for forced bundling, Breaking Bad, The Shield, Rescue Me, Sons of Anarchy, Battlestar Galactica and a host of other good shows would never have existed.
4 How many people stumble on to a show because they already had the host network, without adding a new fee? How many would have become avid viewers if they first had to fork over some extra fee per month?
5 The fact that these networks have penetrated >90 million HH is true only because the MSO model is not dead, and because it directly subsidizes the creation of programming. You don’t have to like it, but that’s how it is.
Alternate sources of revenue (iTunes, Hulu, little green men) are simply not sufficient to bear those eight-figure burdens yet.
1 The tiered cable model may be inefficient and unfair.
2 The tiered cable model certainly requires people to pay more than they would in a perfect world – there are plenty of people who would happily save >$50 a year by dumping the ESPN package if they could – but decoupling that would hurt many more show than it would help.
3 The license fees from cable/satellite pay for most of the great shows that we’re seeing now. Without the cable TV model, they would never have been financed.
So even though we’re paying for tons of stuff we never watch, some of money gets used to create the best new shows on television.