Cable Fee Blame Games Begin

If recent news stories are any indication, it's time for The Cable Fee Blame Games to begin.

  It's no surprise that cable (and other multichannel provider) subscription rates are going up.  Programming license fees keep rising, the number of channels increase, and the last round of retransmission consent negotiations didn't go well for the multichannel industry.  And the increases look to be even higher this year - perhaps enough that the industry is looking for others to blame.  Many licensing deals require system-wide carriage of top channels, and are often sold in conjunction with new or less-valuable channels. So now some cable execs are talking about possibly breaking the basic tier into mini-bundles, even as public interest groups raise the prospect of a la carte pricing.
  It's come to the point where Cablevision launched an anti-trust suit against Viacom, accusing it of forcing the cable MSO to carry (and pay for) less popular Viacom cable networks in order to get MTV and Nickelodeon.

"Without the 'take it or leave it' requirements of bundled programming packages at a wholesale level, cable companies could tailor smaller and lower-priced packages that could offer flexibility and have great appeal to specific interests and audiences," said Charlie Schueler, spokesman for Cablevision.

   Other multichannel providers are experimenting with partial unbundling.  Verizon's offering a basic mini-bundle that drops expensive sports channels and knocks $15 off monthly fees.  Mediacomm has been advocating a hybrid model with the most expensive channels offered a la carte on top of a basic bundle.
   And now the broadcast networks are talking about wanting to get big license fees from multichannel distributors, either directly or indirectly, by grabbing a big share of increased retransmission consent fees for affiliates.  Some of the amounts I've been hearing are unreasonably and exorbitantly high - but between what the broadcast nets are talking, and sports channels passing through sky-rocketing coverage rights fees, coming jumps could be as high as $25-$50 a month, as they can't afford not to have high-demand content in an increasingly competitive environment.  Thus, cable needs to try to put the blame for big rates increases elsewhere.


Here's some other recent headlines and highlights.

• Cable One is going public with what it says is AMC's demand for a 520% increase in license fees.  AMC has seen significant gains in viewing due to a number of successful original series.
  Cable One claims AMC is demanding 520% increase in license fees,  FierceCable
• Dish Network gets $4.86 million jury award from ESPN, after alleging it wasn't getting the "best licensing rates" its contract provided.  That's about 3% of the damages Dish claimed.  Don't expect anybody's rates to go down.
  Jury orders ESPN to pay Dish Network $4.86 million, FierceCable
• In 2012, Mediacom Broadband average video subscription revenues up 12%, subscribers down 7%. Mediacom LLC saw average video sub revenues up 10%, subscribers down 7%.
  Mediacom Broadband increases average video subscriber revenue by $14 in 2012, FierceCable

Sources -  Imagining a Post-Bundle TV World, Wall Street Journal

Dish vs. ESPN over fees

Dish is alleging in a recently-filed lawsuit that ESPN violated a provision in its current carriage deal that Dish says requires ESPN to offer the "same terms" for carriage fees that it offered other major competitors.  In other words, Dish thought it was getting a lowest-cost guarantee.  Instead, they allege that ESPN gave Time Warner Cable a better deal on "ESPN Desportes", and allowed Comcast to drop some carriage (thus fees) of ESPN Classic channel in some of its cable systems.

  ESPN argues that the clause applies to the whole carriage package, and it shouldn't be held to minor differences in terms offered for specific network offerings, or where specific market factors create different marketing foci.  And anyway, as one writer quipped -

One key bit information that hasn't been disclosed: How does one TV distributor know the specific details of another TV distributor’s deal? Aren’t those private contracts?

  The significant growth in network carriage fees (and retrans fees) are having a growing impact on cable, DBS, and other MVPD basic subscription fees - and meaningful differences among the competing multichannel providers can significantly impact on the public's preference among providers. I can see why one (DISH) would want to ensure that their competition couldn't undercut their prices by getting a better rate, just as another (Times Warner) would try to get a better deal.  And of course, why ESPN would want to get the highest carriage fees they can get away with.

  I'm not confident that Dish will win this, but they do provide a glimpse at the level of intense competition among multichannel video program distributors.

Source -  Looking To Combat Sports Network Leverage -- Or At Least, High Fees,  TV Watch