News Corp.'s Chase Carey wants to boost subscription fees for FX and National Geographic
Now that News Corp.'s Fox is starting to get money from cable and satellite distributors for its broadcast stations, the next step is to boost subscription fees for its cable channels, particularly FX and National Geographic Channel.
"We have room to grow," said News Corp. President and Chief Operating Officer Chase Carey during a Hollywood Radio & Television Society luncheon interview at the Beverly Hilton on Tuesday afternoon. FX, which has had ratings success with its original shows including "Sons of Anarchy" and "It's Always Sunny in Philadelphia," still trails other cable networks in terms of what it gets paid from distributors that carry the network.
The two networks Carey cited as getting far more than FX were Time Warner's TNT and NBC Universal's USA Network. According to SNL Kagan, an industry consulting firm, TNT gets about $1.00 per subscriber per month and USA pulls in 57 cents. FX gets 39 cents.
Of course, though FX has some strong shows, USA and TNT have bigger hits with shows such as "Burn Notice" and "The Closer." Also, TNT carries a heavy sports load, which is why its subscriber fee is so much higher than USA's and FX's.
In other words, though FX may be spending a lot on its programming, until it delivers the same ratings that USA and TNT do, Carey & Co. may have a hard time getting distributors to pay a lot more.
Carey also said News Corp's National Geographic Channel pales in comparison with Discovery in terms of subscriber fees, but again it also trails that channel in ratings.
In his interview with Broadcasting & Cable Editor Ben Grossman, Carey kept hammering the broadcast industry's need to keep the pressure on distributors to pay for broadcast signals.
"Broadcast networks for too long accepted second-class citizenship," Carey said.
Actually, that's not entirely accurate. Big broadcasters such as News Corp.'s Fox opted to build cable networks such as FX in lieu of trying to get distributors to pay for their TV stations. Back in the early 1990s, Congress passed a law that allowed broadcasters to seek cash from cable and satellite companies in return for carrying their signals.
However, the cable industry was resistant, so instead a lot of broadcasters, including Fox, launched new cable networks. FX was launched with a 25-cent per-subscriber fee and distribution for Fox stations that -- on paper anyway -- was free. ESPN2 and MSNBC were born under similar circumstances. In other words, Fox and others used so-called retransmission consent to successfully build cable empires worth billions.
Now, though, cable operators are reluctant to add new channels and broadcasters really want to get a second revenue stream for their networks.
Asked who would have to pay for all these new fees -- the cable companies or consumers -- Carey said probably both. He was quick to add that cable companies have big profit margins. "Those distributors are not going broke," he said.
No, but the consumers might at some point.
-- Joe Flint
Photo: Chase Carey. Credit: Matthew Staver/Bloomberg