It seems like an annual rite: to usher in the new year, cable providers and networks squabble over programming fees. This time around, the tussles involved Time Warner Cable and Fox, and Cablevision and Scripps, which owns the Food Network and HGTV. These fights, unlike most corporate standoffs, are waged in public, with both sides running TV spots and newspaper ads pleading their cause. This might seem like an obvious strategy, but it’s also a dangerous one. These ads may remind some viewers of how much they love Bobby Flay. But they also remind those who’ve never glanced at “Iron Chef” how much of their cable bill goes to channels that they don’t watch.

Illustration by Christoph Niemann

That’s a problem, because while cable TV has always relied on “bundling”—you have to buy a package of channels rather than picking only those you want—in recent years the practice has come under fire, in no small part because the price of those bundles keeps rising. The bundles do, of course, include many more channels than they did a decade ago. But, as Kevin Martin, the former head of the F.C.C., was fond of pointing out, if you’re watching only sixteen channels why should you pay for eighty-five? So consumer advocates have been pushing for a system of so-called “à la carte” programming, expecting that this would drive down prices for consumers.

In fact, it probably wouldn’t. The simple argument for unbundling is: “If I pay sixty dollars for a hundred channels, I’d pay a fraction of that for sixteen channels.” But that’s not how à-la-carte pricing would work. Instead, the prices for individual channels would soar, and the providers, who wouldn’t be facing any more competition than before, would tweak prices, perhaps on a customer-by-customer basis, to maintain their revenue. That doesn’t necessarily mean that Bravo would suddenly cost fifteen dollars a month, but there’s little evidence to suggest that à-la-carte packages would be generally cheaper than the current bundles. One recent paper on the subject, in fact, estimated the best-case gain to consumers at thirty-five cents a month. But even if it wasn’t a boon to consumers an à-la-carte system would inject huge uncertainty into the cable business, and many cable networks wouldn’t get enough subscribers to survive. That’s a future that the industry would like to avoid.

So far, the task hasn’t been too difficult, in part because consumers haven’t shown much unbundling fervor. If there were sizable demand for à la carte, you’d expect at least one of cable’s competitors, like DirecTV, Dish Network, or Verizon’s FiOS, to offer it, but none do. You’d also think that, as bundles have grown more expensive, and as building your own TV experience has become easier—by watching online, downloading from iTunes, and getting high-definition network broadcasts via antenna—cable and satellite would have got less popular. But subscriptions continue to grow.

Some of this, presumably, is just inertia. But it’s also true that consumers often find bundles appealing. Many popular consumer products, like the iPhone, are bundles, as are newspapers and magazines: you buy the whole thing, not only the articles you want to read. TV networks themselves are bundles: if you subscribe to HBO (a channel that cable systems do offer à la carte), you pay for all its shows. Consumers also seem to like another form of bundling; namely, flat-rate pricing. At Disneyland, people used to pay an admission fee and then buy tickets for individual rides. But in 1982 Disney introduced all-in-one pricing, and attendance rose. Likewise, people buy gym memberships instead of paying by the visit, prefer all-in-one calling plans, and vehemently oppose the idea of metered Internet access.

The appeal of bundling is partly that it reduces transaction costs: instead of having to figure out how much each part of a package is worth to you, you can make a blanket judgment. Bundling eliminates the problem of fretting about small expenditures, which may be one reason that flat-rate pricing is very common in the vacation industry (cruise ships, all-inclusive travel packages, and so on). It also offers what economists call option value: you may never watch those sixty other channels, but the fact that you could if you wanted to is worth something. Many consumers also perceive bundles as bargains; getting a bunch of things for one price feels like a deal, even when it’s not.

This ought to mean that cable providers and TV networks have little to worry about. But their reasonably stable world could easily be upended. Successful bundling depends on the idea that what you’re paying for is “cable television,” rather than merely a collection of channels. Public fights over programming costs disrupt that idea. When HGTV says it wants more money for its programming, it makes people who don’t watch HGTV wonder why they should pay anything for it at all. And, as these fights raise the cost of programming, the bundle looks less like a bargain, and the appeal of à la carte grows.

Both the providers and the networks, then, would benefit from dialling down the volume and the price increases. But, while it’s in the long-term interest of the industry to keep consumers happy with bundling, it’s in the short-term interest of the individual players to maximize profits, even if that means alienating viewers and making alternatives to bundling look better. In the past decade, media businesses, from music to newspapers, have suffered from the impact of unbundling. Civil wars in the cable business make it likely that it’ll be next. ♦