Comcast Blinks
I may be a few days behind the current events, but Comcast blinked in the war between the Big Ten Network and the cable companies that refuse to add the channel to their expanded basic lineup. Comcast reported disappointing third quarter results last week. While their earnings were not necessarily disappointing, they surprised Wall Street with their announcement that they lost 65k subscribers in the third quarter. That means that 65k people either (1) switched to another cable provider, (2) dropped cable, or (3) switched to satellite television. Option 1 is unlikely given that this industry gorges on monopolistic behavior. Option 2 is unlikely since people are addicted to TV and cannot comprehend living without cable. (how did I do this for 18 years of my life??)
That leaves Option 3. Now why would so many people leave Comcast during the third quarter? It's just slightly ironic that Comcast is the largest cable provider in the Big Ten states. Or how about the fact that the Big Ten Network launched during the fiscal third quarter? This may not be the only reason Comcast lost subscribers, but I bet it is the #1 or #2 most significant reason.
Comcast's refusal to add the Big Ten Network to their expanded basic lineup in states home to Big Ten schools has hurt their stock price. Big time. Comcast's stock was at $26 on the day that the Big Ten Network (BTN) launched. Today? $20.75. Down roughly 20%. That stings, but not enough for Comcast to move of their hard stance against the BTN.
The Detroit Free Press published a scathing article about Comcast last Thursday. Great read, even if I must admit that the reporter might have let a little bias into his column. UM Athletic Director Bill Martin also chimed in, though once again, there is BTN bias.
The Big Ten Network is no saint in this standoff with the large cable providers. However, The BTN openly acknowledges two goals: to provide more comprehensive coverage of Big Ten sports and to make money. Comcast and other large cable operators claim to be looking our for their viewers who don't want to pay more for channels they won't watch. I can name about ten channels on their lineup that no one watches. The difference is that Comcast does not own this channel. Comcase claims that adding the BTN to a specialized sports tier is a fair solution. Of course this destroys the viewer base the BTN needs, and it also allows Comcast to charge viewers far more than the BTN would charge Comcast to carry that station.
Comcast raises a fair argument. Unfortunately, they are also hypocritical.
The real issue is that Comcast does not want to add a network to their expanded basic lineup that they do not own. Fox Sports is 1/2 owner of the BTN. That's why Direct TV was quick to pick up this channel (Fox owns DTV). Comcast recently launched a sports network in Oregon that will air regional sporting events, including Portland Jail Blazers basketball. All cable customers in that market saw their cable bills rise $2 per month, even if they did not want this station. Hmm...that's even more than the $1.10 the BTN wants to charge Comcast.
Comcast also recently raised rates for expanded basic cable in SE Michigan, and removed channels from their lineup at the same time. So much for looking out for their customers.
Despite Comcast's refusal to play ball and honestly negotiate with the BTN, this issue highlights what is great about our society. If you really want to get the BTN in one of these states, you can vote with your wallet. For instance, you can get Direct TV. Comcast might have you in a bind if you are also getting a discount on cable internet, but I am sure there are other legitimate options out there.
If people in Big Ten states really want the BTN and Comcast is your cable provider so that they can watch several of their team's football and basketball games, getting a dish is the best bet. I'm sure you won't miss Comcast's pathetic customer service either. Losing subscribers will continue to shock their stock price and ultimately force Comcast to do what other cable carriers have already done: negotiated a low price from BTN (below the $1.10 per month the BTN has requested), added the channel to expanded basic, and NOT pass along the additional cost to subscribers.
The real problem is that when satellite and cable companies are the biggest stakeholders in the stations that we watch, customers fall prey to monopolistic tendencies. This is especially true when the barriers to entry in these industries is so huge. Imagine spending tons of money to lay cable wire in Comcast country, only to see them price their product so cheaply that no one will change over to the new cable provider in their area. Just because they can.
That leaves Option 3. Now why would so many people leave Comcast during the third quarter? It's just slightly ironic that Comcast is the largest cable provider in the Big Ten states. Or how about the fact that the Big Ten Network launched during the fiscal third quarter? This may not be the only reason Comcast lost subscribers, but I bet it is the #1 or #2 most significant reason.
Comcast's refusal to add the Big Ten Network to their expanded basic lineup in states home to Big Ten schools has hurt their stock price. Big time. Comcast's stock was at $26 on the day that the Big Ten Network (BTN) launched. Today? $20.75. Down roughly 20%. That stings, but not enough for Comcast to move of their hard stance against the BTN.
The Detroit Free Press published a scathing article about Comcast last Thursday. Great read, even if I must admit that the reporter might have let a little bias into his column. UM Athletic Director Bill Martin also chimed in, though once again, there is BTN bias.
The Big Ten Network is no saint in this standoff with the large cable providers. However, The BTN openly acknowledges two goals: to provide more comprehensive coverage of Big Ten sports and to make money. Comcast and other large cable operators claim to be looking our for their viewers who don't want to pay more for channels they won't watch. I can name about ten channels on their lineup that no one watches. The difference is that Comcast does not own this channel. Comcase claims that adding the BTN to a specialized sports tier is a fair solution. Of course this destroys the viewer base the BTN needs, and it also allows Comcast to charge viewers far more than the BTN would charge Comcast to carry that station.
Comcast raises a fair argument. Unfortunately, they are also hypocritical.
The real issue is that Comcast does not want to add a network to their expanded basic lineup that they do not own. Fox Sports is 1/2 owner of the BTN. That's why Direct TV was quick to pick up this channel (Fox owns DTV). Comcast recently launched a sports network in Oregon that will air regional sporting events, including Portland Jail Blazers basketball. All cable customers in that market saw their cable bills rise $2 per month, even if they did not want this station. Hmm...that's even more than the $1.10 the BTN wants to charge Comcast.
Comcast also recently raised rates for expanded basic cable in SE Michigan, and removed channels from their lineup at the same time. So much for looking out for their customers.
Despite Comcast's refusal to play ball and honestly negotiate with the BTN, this issue highlights what is great about our society. If you really want to get the BTN in one of these states, you can vote with your wallet. For instance, you can get Direct TV. Comcast might have you in a bind if you are also getting a discount on cable internet, but I am sure there are other legitimate options out there.
If people in Big Ten states really want the BTN and Comcast is your cable provider so that they can watch several of their team's football and basketball games, getting a dish is the best bet. I'm sure you won't miss Comcast's pathetic customer service either. Losing subscribers will continue to shock their stock price and ultimately force Comcast to do what other cable carriers have already done: negotiated a low price from BTN (below the $1.10 per month the BTN has requested), added the channel to expanded basic, and NOT pass along the additional cost to subscribers.
The real problem is that when satellite and cable companies are the biggest stakeholders in the stations that we watch, customers fall prey to monopolistic tendencies. This is especially true when the barriers to entry in these industries is so huge. Imagine spending tons of money to lay cable wire in Comcast country, only to see them price their product so cheaply that no one will change over to the new cable provider in their area. Just because they can.
