This post first appeared on FloatingPath
An analysis on cable unbundling by Needham & Co. shows that those large amounts of channels you don’t watch have unseen benefits.
If à la carte pricing were to be implemented, Needham’s Laura Martin says that the losses would include $45 billion of TV advertising, 1.4 million jobs, $20 billion in corporate taxes paid, and $117 billion in market capitalization.
In order to keep the average lineup of 180 channels, subscribers would see bills increase by about 75%. However, assuming most consumers select 15-20 channels (the popular range according to surveys), the revenue decrease for the industry could only support about 28% of current channels. In a worst case scenario, distributors would keep a large chunk of revenue up front (as happened in 2012) and pass along only $7 billion to content creators. This would lead to a 93% reduction in channels available.
Of course, consumers fed up with the average $720 in annual cable bills, largely for channels they don’t watch, can always cut the cord.