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No ‘worthwhile’ return: Cable in TV shake-up

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas is not earning a “worthwhile” rate of return on its REVTV product, sector regulators have agreed, with subscriber numbers set to further decrease unless its channel line-up is restructured.

The Utilities Regulation and Competition Authority (URCA), in launching the public consultation on revisions to the BISX-listed communications provider’s TV packages, said historical data combined with future viewing and financial forecasts had made out a sufficient case for the company’s application to be considered.

Referring to the documents provided to it, URCA said: “URCA considers that the spreadsheets provide a reasonable financial justification for the proposed changes. The spreadsheets show that Cable Bahamas is currently not earning its regulated cost of capital in the pay TV market, which is the allowable rate of return it can earn to make providing the service worthwhile.....

“If the proposed changes are approved and implemented, the forecasts project that the changes will not lead to an over-recovery of Cable Bahamas’ cost of capital. The spreadsheets support Cable Bahamas’ claims that subscriber numbers have been on the decline historically, and are likely to continue to decline going forward.

“As such, URCA’s preliminary view is that some intervention is needed to address the ongoing subscriber decreases. The spreadsheets also support Cable Bahamas’ claim that the proposed changes will reduce content costs and improve the margins on REVTV PRIME and other pay TV services.”

Among the data provided to URCA were figures showing the actual demand for Cable Bahamas’ various REVTV packages from 2016 to 2019, as well as forecast viewing and subscriber figures for 2022 and 2023 along with revenues for the same two years. Costs, including Cable Bahamas’ cost of capital, were also provided.

However, none of this has been shared with the Bahamian public or Cable Bahamas’ subscribers in the public consultation document or elsewhere as URCA deemed them subject to “commercial confidentiality requirements”. As a result, it is impossible to independently judge the strength of Cable Bahamas’ case that it is not earning sufficient returns or URCA’s assessment of it.

Cable Bahamas previously told Tribune Business that the TV channel packages were designed to better reflect consumer demands and enhance its competitiveness against rival video streaming services, such as Netflix, Amazon Prime and Hulu.

The changes proposed by Cable Bahamas to its existing residential packages include a net decrease of channels in its most-watched REVTV Prime offering, which will fall from 72 to 68 while the monthly price remains the same. 

Channels such as BET, TV One and BBC America are being added to this package, based on viewing and subscriber demand, while the likes of MTV, Cinemax, TNT HD and the two Sports Max channels are being removed.

Cable Bahamas will no longer be required to subscribe to the REVTV Pro package to receive “add-on” bundles, while the REVTV Prestige, and REVSportsPrime packages will be discontinued.

Instead, the BISX-listed communications provider’s TV offerings will mirror that of major programming/content producers such as Disney and Fox. It will offer residential subscribers a seven-strong REVTV Kids line-up for $5 per month, along with 16-channel REVTV Sports for $15 per month. The latter compares to ten channels under the previous REVTVSportsPrime at $10 per month.

REVTV Lifestyle Extra; REVTV Rhythms; and REVTV News and Science round out the new residential packages, with the changes involving moving content and channels around rather than any major price hikes.

Cable Bahamas, in explaining the rationale for the changes, said it was seeking to enhance consumer choice and flexibility as to what they watch, and when, by aligning channel packages with viewing habits while removing content that is watched the least. As a result, it is aiming to cut programming costs while holding prices - especially for REVTV Prime - constant and not diminishing value.

“Cable Bahamas’ repackaging entails a net reduction in the number of channels for REVTV PRIME (residential and business), the movement of several channels between existing packages, and the creation of several ‘add-on’ packages targeted towards specific audiences,” URCA said.

Noting that Cable Bahamas had wanted to implement the changes from January 31, 2021, but this date was impractical because the application to change the line-up for business customers was only received 11 days earlier, and public consultation was required, URCA added: “Cable Bahamas explained that an increasing number of people prefer to stream TV services to watch content when and where they desire instead of watching the traditional TV services offered by Cable Bahamas.

“Cable Bahamas believes this shift in viewing habits has contributed to a reduction in TV subscriptions and viewing hours for its traditional TV services. In response to declining subscriptions, Cable Bahamas conducted an extensive review of customers’ TV viewing habits to better understand the value and use of its existing REVTV services.

“The review revealed that several TV channels offered by Cable Bahamas are only viewed by a limited number of customers, resulting in high content costs per view. The high content costs per view occur because Cable Bahamas pays for content on a per subscriber basis regardless of whether subscribers are watching the channel,” URCA added.

“These costs are especially relevant in the case of the REVTV PRIME package because it has the most subscribers. Cable Bahamas further explained that it did not consider a price increase for REVTV PRIME to be in the best interest of customers if the price increase is used to pay for content that does not contribute to customer satisfaction.”

As a result, URCA said Cable Bahamas’ strategy was “to align its REVTV offers with customer viewing habits while maintaining the same headline price of REVTV PRIME. This, it added, involved removing “low value” channels and replace “some of the more popular channels with cheaper content” as it did with Hallmark.

And, with REVTV Pro being “a very low profit margin”, the BISX-listed communications provider proposes to increase the monthly fee for residential customers by $4.05.

Comments

tribanon 3 years, 9 months ago

I haven't watched Cable TV for years. Nothing but garbage programming with Cable Bahamas making it worse each and every time it seeks approval from URCA for programming and/or rate changes of any kind. I sold my Cable Bahamas shares years ago (before Keeping jumped ship) and I guess it's now time for me to seriously explore the possibility of cancelling my worthless basic REV TV subscription service. The cable TV business model is all but dead in most developed countries.

URCA's mission and mandate does not and should not include forcing Bahamian consumers to in any way subsidize REV TV's dying business model.

moncurcool 3 years, 9 months ago

I canceled my Cable TV package years ago the package was nothing but garbage and was not worth the money. And I have not missed it or lost out on anything. Sadly, Cable needs to realize changing 2 channels will not bring people back. They need a major overhaul.

jamesg30 3 years, 9 months ago

Rev is a terrible product. Spanish language programming, not just commercials. 50% of the channels are crap. Used to have tennis channel, Sundance.....just keeps getting watered down and expensive. Not hard to predict the erosion of customers to streaming exclusively. If you want u. S. network channels, there are streaming options. Better make quality of channels better and don’t expect customers to pay for watered down moronic programming and/or channels.

Bobsyeruncle 3 years, 9 months ago

You would have thought Cable Bahamas could digitally track which are the most watched channels in The Bahamas. They can then get rid of all the surplus crap that hardly anyone watches. Alternatively, they could offer an a-la-carte plan where the customer can pick & choose a set number of channels for a fixed monthly fee. I doubt there are many people who regularly watch more than a dozen channels out of the 200-300 currently offered. Most of us here probably grew up with 3 or 4 channels on the TV at most

watcher 3 years, 9 months ago

the two Sports Max channels are being removed.

Well, I guess I may be in the minority, but these two channels are the only ones that show test match cricket and Europa /Champions League football - the decision to 'cut the cable' gets easier with every Cable Bahamas announcement!

Baha10 3 years, 9 months ago

Just plain awful ... more and more channels are blacked out for presumably non-payment of royalties making it very hard to watch and follow any international sport, including various Soccer Leagues,Rugby, Formula 1, Americas Cup, etc., etc.

tribanon 3 years, 9 months ago

What do you expect from a company with a Butler overseeing it?

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