The cable television industry's conundrum
When assessing the future health of an economy, experts pay close attention to a particular measure: inflation.
That's why some Wall Street analysts are monitoring runaway inflation in cable TV network programming. A recent study by consulting firm SNL Kagan calculated that cable TV networks' content costs have climbed at an annual rate of 9%. Some cable channels, primarily those that offer sports, have experienced even greater increases.
Take ESPN. In 2006, the cable sports juggernaut spent $3.5 billion to program the channel. This year, the Walt Disney Co.-controlled network spent $5.2 billion -- an increase of nearly 50%. General entertainment channels, including TNT, TBS and History Channel, also have witnessed staggering increases as they ramp up original productions to compete with the broadcast networks.
Although cable channels continue to be the most profitable divisions of their parent media companies Disney, Time Warner Inc., NBCUniversal, News Corp. and Viacom Inc., the trend is worrisome. Consumers eventually will feel the sting of the higher costs.
Read the full story in Thursday's Los Angeles Times.
-- Meg James
Photo: Arizona Cardinals running back Beanie Wells during a game against the Pittsburgh Steelers in Glendale, Ariz. Credit: Paul Connors / Associated Press