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Why Verizon's New Plan Could Revolutionize Television

The following video is from Monday's MarketFoolery podcast, in which host Chris Hill, along with analysts Jason Moser and Tim Hanson, discuss the top business and investing stories of the day.

Verizon (NYSE: VZ  ) is looking to shake up the cable television business by paying television providers based on how many people actually watch their channel. Disney's (NYSE: DIS  ) ESPN averages around 1 million viewers. Comcast's (NASDAQ: CMCSA  ) USA Channel averages around 1.3 million viewers. Verizon paid $5 per household per month for ESPN but only $0.68 per month for USA. What would Verizon's plan mean Disney and Comcast? What would the plan mean for Netflix (NASDAQ: NFLX  ) ? In this installment of MarketFoolery, our analysts discuss the potential game changer.

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

The relevant video segment can be found between 12:06 and 17:35.

For the full video of today's MarketFoolery, click here.


Read/Post Comments (9) | Recommend This Article (6)

Comments from our Foolish Readers

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  • Report this Comment On March 18, 2013, at 10:33 PM, prginww wrote:

    Between my wife and I, we've got about 20 or 30 channels on our fav's and some are the same. I've always wondered, "why I do I pay for channels I didn't watch and had to pay extra for channels I wanted." There has to be some equilibrium.

    This doesn't mean "Charge me extra for the most popular channels". It means, "I'd like to watch some shows you've got, but you're not the only tool in the shed".

    Hopefully, this will help me get my cable TV bill below $125, that's excluding phone (which I rarely use) and internet and cell phone(s).

    By the way, we all still change channels during commercials. If we're not changing channels, we're looking at our iPhones, Smart phones or tables to check our facebook, twitter or whatever other social media we have. And, to that point, we still ignore the 'annoying' ads to products you think we want just because we happen to "like" something.


  • Report this Comment On March 19, 2013, at 3:59 AM, prginww wrote:

    I am certainly in favor of charging per channel. It's definatly an improvment over what we have now. There is however an even more granular way of looking at it that not many people talk about. Why are you paying for shows you dont watch?

    Even if there are several shows on a channel that you like, there is probably a whole host of other programming on that channel that you dont care about.

    I like the walking dead. I dont care anything about mad men or breaking bad. If I pay for AMC, I'm still paying for a whole lot of programming that I dont watch.

    Again, I'm not arguing against paying by the channel. I'm just saying its the beginning, not the end. The end will be that we pay for the individual shows that we want to watch.

  • Report this Comment On March 19, 2013, at 7:17 AM, prginww wrote:

    @HighVoltage627 Your comment made sense until you said you don't like Breaking Bad.

  • Report this Comment On March 19, 2013, at 9:10 AM, prginww wrote:

    While we're on the subject of cable, let's do the math. But before I do, let me state, the figures are a year old but since they've only gotten worse, they still serve as a good basis for the point of my posting. A 30 minute show offers 22 minutes of program and 8 minutes of commercials equating to 26.7%, while a 60 minute offers 43 minutes of program and 17 minutes of commercials equating to 28.3%. Using an average of the two percentages gives us 27.5% per channel for commercial calculations.

    You pay your provider a monthly fee so they can use your television as a billboard in your home hawking their products, 27.5% of the time, which is 16.5 minutes every hour.

    Oops! I forgot those beloved infomercials. The 30 minutes of joy telling how you can become a millionaire with no money or credit. How you can eat all the food you want as much as you want and still be size 2. How you can become a gourmet chef if you'll just "set it and forget it" and the list of miracles available for just three easy payments goes on and on.

    I'm sure you agree with few exceptions, channels go into "paid programming" mode somewhere between 11pm and say 2am, and continuing those enlightening wonders until 6 or 7am, and even further into the morning on weekends. But let's be fair. We'll use start and end times of 12am and 6am respectively, giving you 6 solid hours of infomercials per day per channel.

    So, for 18 hours, you lose 16.5 minutes per hour totaling 297 minutes, and then 6 hours, or 360 minutes of solid infomercials, meaning 657 minutes, which is 10.9 hours, are actually commercials. Commercials being broadcast on your television 45.4% of the time by a company you pay 100% of a monthly fee to do so. Funny how they also charge a rental fee for a box needed to receive their digital signals, but they use your television as a billboard for free.

    And I won't even mention how they commandeer the bottom left and right corners of your screen with logos and programming information. You don’t mind that. Heck, it's not distracting at all.

    Some of you are thinking, "I have my DVR so I don't watch commercials". Well, good for you! Although, you still receive them, you just don't watch them. And how much more do you pay for that DVR capability? Oh, you have your own DVD burner and don’t pay extra? So I guess the DVD burner company gave you one for free? Lucky you, I had to pay for mine.

    Let's recap. You pay 100% of a monthly fee plus extras, and receive entertainment 54.6% of the time, and I use that word entertainment loosely. Although, I know we all love seeing "Pretty Woman", 3 nights in a row every other weekend, especially when it alternates with "You've Got Mail" and "Jerry Maguire". Quick! Get me a Kleenex. Here comes that "You had me at hello" line.

    But with our economy as good as it is, the average family's cable bill of $130 to $150 per month, $1560 to $1800 per year, is just pocket change. It's hardly even a full tank for that SUV in your driveway. So keep paying for cable and I'll quit complaining. Now excuse me. I have to go watch reruns of "The Real Housewives of Fargo, North Dakota".

    Wait! I can't! I cancelled our cable about 5 years ago.

  • Report this Comment On March 19, 2013, at 10:32 AM, prginww wrote:

    @ aboutyourcat,while a little long winded I agree with you. I haven't payed for Tv for years. That's not to say I don't watch the programs I enjoy. I have found numerous sites on the Internet (some of which I'm sure are guilty of copywrite infringement) that are free and have all the current shows(including HBO and Showtime series).And there are no commercials to fast forward through.

  • Report this Comment On March 19, 2013, at 12:31 PM, prginww wrote:

    Basic Cable is too expensive and offers nothing but continuous re-runs of old movies and programs. I'm very disappointed in the service.

  • Report this Comment On March 19, 2013, at 2:04 PM, prginww wrote:

    We went to Comcast because Verizon Internet is really bad. They offer FIOS in areas near to us but to in our area.

  • Report this Comment On March 19, 2013, at 2:51 PM, prginww wrote:

    I work for d t v, so my perspective is that television providers are similar to oil companies: the rich are going to keep getting rich. Don't expect a change too soon, and if it does change don't think that the provider(s) are going to take a loss; If there making a billion dollars a year know that the new proposal will be similar to or equivalent as far as the profit. It's all about financial numbers above customer satisfaction.

  • Report this Comment On March 20, 2013, at 9:20 AM, prginww wrote:

    TV? What's that? Another device designed to waste away the precious hours of our life. I got rid of it long ago and life has never been better. Do yourselves a favor and unplug from the monster.

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