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Bizlaw, it does matter how much people watch, but not nearly as much as it does for advertising. More important is whether people, at the time of their cable subscription decision, think they may want to watch later. They buy cable in order to have the OPTION to watch in the future, not because they are necessarily committed to watching. People (and businesses) often pay for options they end up not using. Especially when it comes to TV, which is commonly used as a backup entertainment option.
On the cable company side, they know people will pay $50/month for their bundle, so the question is more about the marginal subscribers -- channels get paid according to how many additional subscribers they bring in. BTN may bring in a number of male sports fan who otherwise would skip cable, but who then neglect to watch; while the Weather Channel may get lots of viewers but not bring in many subscribers.
So it's possible to be a poorly watched channel yet worth a lot of money in subscriber fees.
Yes, but only to a point. Manhattan sports consumers may gladly pay more for their cable bill once because it's added the BTN to it, and it sounds cool, but if you never watch it you are not going to want to continue paying for it (even as bundled product).
I'm not trying to overstate the importance of how many people watch it, but to think there will ever be a product for which ultimate consumer use is irrelevant is just silly.