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No-Frills Cable TV

11:00 AM -- Time Warner Cable Inc. (NYSE: TWC) chief marketing officer Sam Howe offered the first public glimpse of a new, low-end video offering at this week's SNL Kagan conference in New York, and, perhaps to no-one's surprise, ESPN, the most expensive cable network of the lot at a reported US$4 per sub, didn't make the cut.

Sanford C. Bernstein & Co. Inc. analyst Craig Moffett, who moderated the panel with Howe, issued a note Thursday about the "TV Essentials" package, stating that TWC plans to launch it by around mid-December.

TWC is currently market testing it in Cleveland, New York, and parts of Ohio for $39.95 to $29.95 per month, though Moffett thinks it'll end up getting priced on the higher end of that range.

The new tier is coming into play as cable operators continue to shed basic video subscribers in the face of consumers, hit hard by the economy, seeking out cheaper alternatives, including over-the-top options. Hard to say if TV Essentials will address the needs of the budding "cord-cutting" crowd, but it could keep "cord-shavers" some from downgrading to the cheapest basic cable TV package. (See Where Did Everyone Go? .)

On that note, Moffett points out that TV Essentials is a 'tweener tier that will end in the middle of cable's basic packages (from $10 to $15 per month) and expanded basic packages, which sell for $50 to $60.

But TWC can't just pick and choose how TV Essentials is being assembled. A package like that, Moffett writes, "can only be offered with the cooperation and consent of content providers who are increasingly wedded to full distribution of all their cable channels."

In the case of Walt Disney Co. (NYSE: DIS), it's allowing TWC to offer a tier without ESPN and The Disney Channel, but ESPN News is in there.

But several others aren't making the cut on the new tier, which is expected to have about 50 channels. According to the Los Angeles Times, others that won't make it in initially include TNT and CNBC, while TBS, CNN, Fox News, and MSNBC will be part of the new package.

The article notes that those customers who sign up for the new package can still order premium channels like HBO, but will have to pay the full freight... no discounts allowed. It also mentions that they can't get DVRs as part of the tier, which could end up being a a deal-breaker for some.

— Jeff Baumgartner, Site Editor, Light Reading Cable



shygye75 12/5/2012 | 4:17:55 PM
re: No-Frills Cable TV

Mr. Howe has his work cut out for him, trying to market this idea.

spc_markl 12/5/2012 | 4:17:54 PM
re: No-Frills Cable TV

It may be a case of the proverbial "caught in the middle"; in other words, ineffective.


Mark

OldPOTS 12/5/2012 | 4:17:53 PM
re: No-Frills Cable TV

I know they want to do all digital because that is where the afluent money is, at least for now. But they keep reducing the analog basic offerings and the content is becoming what I can get on the streaming TV along with over the air channels.


OP

shygye75 12/5/2012 | 4:17:52 PM
re: No-Frills Cable TV

Sounds ... complicated. Exactly what most consumers don't want when they think about TV.

Jeff Baumgartner 12/5/2012 | 4:17:52 PM
re: No-Frills Cable TV

Complicated?  Cable bills?  Surely you jest! ;)   I don't quite get the no free vod thing. Why take that out?  If it's ad-supported doesn't it make sense to get as many eyeballs as possible watching that stuff?  Or there's some weird calculation they've made that ties in the cost of the new tier with the bandwidth costs they'd have to take on based on expected usage of free vod content.


I'm guessing they see free vod as a carrot they can dangle out there future upgrades, but it comes off looking like an punitive measure that's not really necessary. JB


 


 

Jeff Baumgartner 12/5/2012 | 4:17:52 PM
re: No-Frills Cable TV

A few other things in the announcement on the new tier and some of the compromises.  Subs get two SD boxes and access to the StartOver and LookBack features, which is nice.  They can also get VoD -- but just the paid, transactional titles. They don't get any of the ad-supported "free" VoD content.


JB

shygye75 12/5/2012 | 4:17:51 PM
re: No-Frills Cable TV

Agreed -- the apparent aim is to reduce head count and expenses for big-ticket networks. The VOD restriction doesn't appear to be tied to that, so there must be another reason for it. What's the rationale behind taking HD channels out of the mix? Do operators pay a premium for those? Or is it simply about the cheaper set-top.

Jeff Baumgartner 12/5/2012 | 4:17:51 PM
re: No-Frills Cable TV

I'd like to know how they calculated all this and how they determined what bells and whistles stayed in which were put in cold storage.  HD boxes are more expensive, plus giving them SD boxes keeps subs from accessing HD-VoD content or any StartOver content in HD, which all requires 4x the bandwidth of SD streams 


 But they do seem to be targeting a very limited market since pretty much all new TVs are HD... so if TV Essentials subs happen to have an HD set and want to enjoy HD programming (from cable versus what they can get over the air) they'll still have to pony up for the more expensive box.  But i'm not sure how that woudl be done... maybe a premium box charge? It's worth looking into. JB

OldPOTS 12/5/2012 | 4:17:51 PM
re: No-Frills Cable TV

The most significant to us analog basic/extended subs is that they are offering 2 SD boxes. One of the reasons I have stuck with analog is that my house, like my neighbors, is wired to distribute/split to multiple tuners; me, wife, kids.


Besides TWC we have a choice of FIOS, but most neighbors are on FIOS internet to only stream TV to all.


OP


 

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