[danielweber]

The marginal cost to the cable provider of providing you with HBO versus ESPN+HBO is nil. Bundling makes perfect sense.

You might complain about cross-subsidization, but you are both payee and payer in that bargain.

If you could get only HBO, it would cost a lot more than what it costs on top of a cable subscription.

It's like two people buying a newspaper with two section. Person A only wants section A and person B only wants section B. They each complain about subsidizing the other section. They see the 50 cent cost and say "I would only pay 25 cents if I was only paying for the half I wanted!" But the costs to the provider for only providing you with one section is exactly the same. If they only gave each person just what they wanted, each person would pay, to a first approximation, 50 cents for getting one section.

[illuminate]

"The marginal cost to the cable provider of providing you with HBO versus ESPN+HBO is nil. Bundling makes perfect sense."

To the provider. The customer is directly paying for Disney/ESPN/Fox and whatever else is on basic cable. I don't want to subsidize any of that crap, no matter how cheap it's being offered to me.

[danielweber]

'tptacek claimed that bundling makes perfect sense. And it does, for the same reason that newspapers don't charge extra for the sports section.

Bundling happens in every industry with high fixed costs and low marginal costs.

I don't want to subsidize any of that crap

You are in a shared market.

CNN makes around $250 million a year from cable subscribers. Let's say 100 million households with cable just to make the math easy. So each is paying $2.50 for CNN.

Now, let's say all those households got to choose yes/no on whether they got CNN, and half those houses don't watch any CNN and half of them watch CNN regularly. They wouldn't be paying $2.50 each. They would, to a first approximation, be paying $5 each, because built-in to CNN's pricing to the cable companies was the fact that only half their customers watched it, and it doesn't cost the cable company any extra to provide it to those people who don't want it.

To a smaller degree, this is what happens if you shop at one store in a mall. You are "subsidizing" the other stores in the mall because they have joined forces to reduce their shared, fixed costs. But those other stores are also "subsidizing" you.

[illuminate]

"They wouldn't be paying $2.50 each. They would, to a first approximation, be paying $5 each, because built-in to CNN's pricing to the cable companies was the fact that only half their customers watched it, and it doesn't cost the cable company any extra to provide it to those people who don't want it."

And why should this concern me?