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Should Sky and Virgin be forced to unbundle their unwanted TV channels?

Ever since multi-channel TV launched, people have been complaining that the way channels are bundled together makes them pay for channels they don’t want.

It’s always seemed that the pay-TV service providers have been hand in glove with TV producers in this arm-twisting, but across the Atlantic, things may be changing.

US cable TV operator Cablevision is suing giant TV producer Viacom for forcing it to carry and pay for channels its customers don’t want, claiming it not only forces up prices, but makes the network more expensive to operate.

Should Sky and Virgin be forced to unbundle their unwanted TV channels?
That’s a lot of channels. Do you want them all?

Viacom produces key channels such as Nickelodeon, MTV and Comedy Central, but Cablevision complains that these are very expensive unless it also carries channels like MTV Hits and VH1 Classic, which get very small audiences.

Until now, it had seemed that agreements where TV distributors got lots of channels were good for both sides, because the distributors could claim to offer more channels than their competition.

What’s changed? For a start, TV distributors want to cut costs, and these unwatched channels aren’t worth the trouble. 

Then there’s cord-cutting: subscribers cancelling their TV packages so they can use cheaper, more selective services like Netflix and Hulu and only pay for broadband.

The pay-TV operators need to look more streamlined and offer better value with more than just a roster bulked-up with channels people don’t want.

Could Sky and Virgin unbundle?

Most people watch TV or get their video from only about 12 channels or brands, and these days even the most basic Virgin or Sky subscription will deliver many more channels you don’t care about.

So why can’t you just pick the channels you want from a menu – and would you save money anyway?

It’s unlikely that Sky would offer an a la carte menu, because it owns half a dozen channels outright (although they would be popular choices), and has financial interests in the likes of National Geographic and Fox in the UK. 

All of these channels bring in more advertising revenue, which is just as vital as subscription income – that’s why they exist.

In fact, in the past few years Sky has gone from smaller packages such as entertainment, factual, music and kids’ channels, to two ‘basic’ and ‘extra’ packages. That’s less choice than ever.

It’s unlikely Sky would change direction, and its response to Netflix and Lovefilm has been the two-pronged Sky Go for subscribers and Now TV for the rest.

Should Sky and Virgin be forced to unbundle their unwanted TV channels?
Netflix and Lovefilm are targeting Sky and Virgin

Virgin might want to cut the cost of carrying channels no-one wants, but like Sky its goal is to tie you into a broadband, TV and phone bundle too complicated to unpick.

That leaves TalkTalk and BT, who might be more willing to offer the a la carte approach, if they could convince the likes of Sky, UKTV, Disney, Turner and Viacom to let them – or the viewers – pick and choose.

And if you could take an a la carte selection, would you save any money?

Probably not: the TV producers would just axe the under-performing channels but everyone would want to make the same amount of money for their shareholders. You’ll get less but pay the same for it.

On top of that, you’d have put lots of people out of work producing these barely-seen channels.

On demand: direct to what you want

On demand TV, whether its Sky On Demand, Virgin, Netflix or Lovefilm, seems to let you get to what you want without paying for lots you don’t want.

It isn’t, though. You just don’t see it because you can search for the things you want and clever algorithms show you things that match your viewing profile. 

That doesn’t mean Netflix isn’t buying lots of films and TV shows you don’t like, but it’s cheaper than Sky because it’s not spending so much money on premium content from HBO, or supporting millions of set-top boxes. 

Like an online retailer who undercuts the high street, Netflix and Lovefilm are cheaper than Sky or Virgin because they have fewer overheads.

There’s another reason the new online services cost less: they have to, to win you over from the old pay-TV services. If they make it to a point where they’re happy with subscriber numbers, then just like Sky did they’ll start jacking up subscription rates to pay back their shareholders.

By that time there may be another threat: perhaps we’ll spend all day watching other people’s Google Glass live feeds on whatever YouTube has become. After all, YouTube’s going to start charging soon.

Netflix image: Daniel Afanador/Flickr

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