Unbundling Cable

The Cloud can cut off Fox News at the knees

Over the weekend, Google briefly carried through on its threat to remove 15 Disney channels from its YouTube TV cable replacement and cut the price by $15/month.

Coverage focused on the brevity of the cut-off. In the process they missed the story.

This is the first time anyone has successfully unbundled cable TV. Previous threats by programmers to cut off cable operators succeeded because customers complained. The operators never cut their prices in response, as Google did in this case, and as it threatened to do earlier with Comcast.

Disney’s bluff included the line that disaffected viewers could \buy the “Disney Bundle,” combining its ESPN+, Hulu+, and Disney+ streams, for less than the YouTube price cut. What Google wanted was for Disney to charge it no more than it would cable operations of similar size. They likely got that.

But if Google could set a price for a company’s cable channels, and cut off those channels when it couldn’t get that price, why not make that part of the service?

A la carte pricing for cable has been discussed for decades. Nothing has come of it because the numbers didn’t work. The per-channel price greatly exceeded that of the bundle because the programmers set it.

But with streaming the math changes, A cable channel, even a large collection of channels, is now just a streaming offering. The same actors wheedling their way into streaming -- Peacock, Paramount, HBO Max, Warner Discovery – they’re all cable programmers. Most of what they’re offering is the same drivel you now get on cable. They are just selling it direct, at a per-programmer price.

If Google did the same thing, set a price for each programmer, adding up to its current $65/month, it could gain market share against Pluto, Fubo, and even Hulu. How many millions would then cut off Fox News, which depends on cable subscriptions for its existence? We know that many cable cord-cutters act based on the cost of ESPN, $9/month for what are mostly talk shows.

If Google refuses, Amazon could do this through its “Amazon channels” program. It’s amazing they haven’t seized this opportunity already.

The Cloud Czars are worth many multiples of the cable programmers. Disney, with its successful streaming operations, is the most valuable at $265 billion. Warner Discovery is worth maybe $150 billion. Comcast’s programming operations are worth less and Paramount+ parent ViacomCBS is worth just $20 billion. By way of comparison, Amazon and Google are both approaching $2 trillion in value, because they invested in cloud data centers, which is now how TV is bought.

If the programmers resist, the Cloud Czars win a great PR victory. Imagine those evil TV people keeping choice from the American people! Given how governments are now so anxious to regulate the Cloud Czars, it’s a no-lose proposition.

Update: Disney channels are repopulating sporadically on my copy of the YouTubeTV app. They appeared in the “home” section about 24 hours after Google’s announcement of a deal. They appeared in the “live” section some time after, but only when using its “default” mode. You may still need to go online at https://tv.youtube.com/settings/liveguide to get things right.

Note: The custom view lets you remove channels from your list. But you still pay for them.