I never understood this with cable TV either. You could use an antenna and watch TV over the air (with ads) or you could pay for cable and still watch ads!

Before streaming, if you didn't live in a large metro area, cable got you a good clear picture and more than one or two channels. That was the selling point for it when I was a kid. With OTA reception we would have had two channels with a clear picture and maybe two or three more with a lot of static/snow.

Cable just carried regular broadcast channels back then. The value you paid for was more channels and better picture, not avoiding ads. HBO was the first premium add-on, and it didn't have ads.

Some people set up a big dish antenna in their yard so they could get content directly off the satellite backhaul. This might not have had ads but it was a fairly big investment and you had to be sort of an AV geek to use it.

Cable at least made sense on paper (if not obvious to the consumer). The channels were independent companies, they pay for the rights to content and get paid by ads. But they had the problem of how to actually get their feed into your home (over the air broadcast was the only D2C option).

The cable provider was just a delivery mechanism. So you pay them to deliver the feeds. But they didn’t get any revenue from the content providers (or their ads).

In other words, two different companies, two different services (content vs delivery), and two different revenue models.