Last week the S&P Media Index lost 8.3 percent (approximately $53.7 billion of value) in just three days. During that time, shares of Viacom (VIA) lost 20 percent, 21CF (FOX) and Discovery Networks (DISCK) lost 11 percent, Disney (DIS) took a 9 percent hit, and even CBS dropped 6 percent. It was a tough week.

Pundits offered many reasonable explanations for the losses. The most popular blamed Disney CEO Bob Iger for scaring investors with his tale of ESPN's distribution woes.

He said, “We're realists about the business and about the impact technology has had on how product is distributed, marketed and consumed.” Which by itself is not a big surprise, but he went on to say, “We're also quite mindful of potential trends among younger audiences in particular, many of whom consume television in very different ways than the generations before them,” which was interpreted by pundits and investors alike to mean that ESPN might one day have to be sold directly to consumers (bypassing traditional cable bundled distribution).

If you're a student of the media business, you know that over $6 of your cable bill goes to ESPN every month – it's the most expensive channel in your cable bundle. So, taken with the huge popular notion that all consumers want à la carte cable programming, the most emotionally satisfying narrative about last week's broad selloff is that if ESPN is not thriving in the face of these known headwinds, the rest of the cable business has no chance.

Two Arguments – Neither One Matters

Those who argue for unbundling insist, “While it's true that ESPN is invaluable to its core audience, it is useless to the people who don't care about sports.” Cable industry executives will argue, “Unbundlers are super naive in the way they think about the cable industry's current business model.” The cable industry admits that you do overpay for some channels, but it insists that the total dollars available enable the production of a wide range of less popular but still valuable content.