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Broadcasters' tough talk with cable is not without risks

Are broadcasters getting too brash in their push to get cable operators to pay big bucks to carry their television stations?

That's what one industry analyst is wondering. In his Dec. 18 report (registration required) on the heated retransmission consent negotiations between Time Warner Cable and News Corp.'s Fox, Pali Research's Rich Greenfield warns that all the tough talk from broadcasters could draw some government scrutiny.

CHASECAREY"We are actually quite surprised at how openly (and aggressively) the senior executives are talking about retrans -- as we would fear that the government would begin to look at them as a cartel," Greenfield wrote. He added that since broadcasters use the public airwaves for their programming (which they get for free) and there is a Democratic majority at the Federal Communications Commission, "a fine line must be walked."

Greenfield cites tough talk from News Corp. Chief Operating Officer Chase Carey, who said at a recent investors conference that since ESPN gets almost $4 per subscriber per month from distributors, and Fox has the World Series and a Super Bowl every few years, that could "probably justify $5 per subscriber." CBS Chief Executive Leslie Moonves said at the same conference that he is "rooting" for Carey in the spat. Bob Iger, the chief executive of ABC parent Walt Disney Co. and NBC Universal chief Jeff Zucker have also struck similar tones on the subject.

News Corp. and Fox turned up the volume in its clash with Time Warner Cable, taking out advertisements telling consumers the cable company is trying to take away their favorite shows, such as professional football and "American Idol." Time Warner Cable, for its part, already launched a campaign criticizing programmers for raising costs. Although the company did not mention Fox by name, it's pretty clear who the advertisements are aimed at. Fox is looking for $1 per subscriber, per month from Time Warner Cable to carry its local TV stations, including KTTV-TV Los Angeles.

Usually these disputes are resolved before a signal gets pulled. The last major battle that resulted in a channel going dark was in 2000, when Disney pulled ABC's signals off Time Warner Cable during the May sweeps.

However, with Fox asking $1, Pali's Greenfield thinks this time the signal will go off. Fox, he says, has the leverage, but it is not a one-sided battle. And if both sides refuse to back down, they run the risk of government intervention. Then they both lose.

-- Joe Flint

Photo: Chase Carey; credit: Fred Prouser / Reuters

Related Posts:

News Corp.'s Chase Carey ready for battle with Time Warner Cable 

Time Warner Cable takes aim at programmers


Comments () | Archives (6)

I think what both sides are forgetting is the internet. Fine, raise the price, pull the signal. I'll just cancel my cable service and watch TV online.

I pretty much use the internet exclusively to find my television shows, now, anyway, and just need a shove in the "cut the cable" direction. (I still have it for news and sports, and because it is pretty convenient to watch on the television.) But that can change in an instant.

I don't have cable because I read my news online. My roommates have their TV programs over the air so no need for cable either. Anyway, why is FOX charging something that we can get over the air free?

The use of public airways by large media conglomerates has long since abandoned the pretense that these airways are owned by "the people." That battle was lost. Look at Fox news, they in no way represent the public, it has instead become a partisan tool of narrow interests. So why would the FCC stand up to the networks? They are a monopoly, no doubt about it. And they of course will soon merge or buy their way onto the internet as well. Pay your ever rising cable bill, or dish, or whatever the technology is at the moment, because you got no choice suckers, unless it's to turn the tube off. And what american could do that?

Heather and Irene are due for an unpleasant surprise. Those shows they're fond of watching via the net just won't be there for long - at least not for free.

Good programming is expensive to produce, and the producers are in the process of finally figuring out that it doesn't make sense to give it away at the expense of the paying customers - those who watch over the air or on cable/satellite.

The sooner the producers figure it out the better Hollywood's economy will be.

Time for the Government to step in and settle this. These companies are as bad as the current Politicians!

Broadcasters should concentrate more on their over the air digital channels and not be held hostage by the cable industry. Expansion to their own sub channels and enhance digital delivery would free the consumer from cable fees.

A good example in Los Angeles is Channel 18 & Channel 44, both have taken advantage of all their sub digital channels thus covering the LA Basin without the need of cable services. A friend only subscribes to cable for the Disney Channels and would drop cable if Disney/ABC took advantage of the LA Basin digital delivery. Therefore, ABC would increase coverage for advertisers and not be depend on cable subscribers. Fox is well in position of doing the same. On a national level, over the air top 20% of the television markets covers 80% of the TV viewers.

Once our cable contract expires in early 2010, we will be free of cable's monthly $85 for the over the air channels we view & hopes ESPNs will be carried on 7.3 & 7.4. We already enjoy 7.2 LW as well as 7.1 and Channel 11 Fox.

The present Internet is not anywhere near high speed digital broadcast and free wifi is still poor in many places. But improvements are coming and then broadcasters will have 2 delivery systems. Still, over the air in the majority of the nation will be more convenient than the Internet and cable services.


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