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Cable programming costs will continue to rise

Sports rights drive programming costs
While subscriber growth is slowing for cable television companies, the cost of content continues to rise.

According to a new report from Nomura Equity Research analysts, the money that distributors such as Comcast Corp. and Time Warner Cable shell out for programming rose 8.2% in 2011 and is likely to jump 8% in each of the next two years.

Although the typical cable household gets more than 100 channels these days, most of those channels are owned by a handful of companies including News Corp., Time Warner Inc., Comcast, Discovery Communications, Viacom and Walt Disney Co. Overall, cable and satellite companies coughed up $33.5 billion to content providers in 2011.

Walt Disney Co., parent of ESPN and Disney Channel, two of the most expensive cable channels, accounted for almost 25% of that $33.5 billion, according to the report. ESPN, of course, spends very large sums on sports rights, including the National Football League. 

Time Warner, parent of TNT, TBS, CNN and HBO, received 21% of the overall spending. Comcast, which owns USA, MSNBC and Bravo, accounted for 16%. News Corp., whose holdings include Fox News and FX, had a 14% slice of the pie. Combined, those four companies account for 75% of cable programming costs.

Cable programming isn't the only cost that is increasing. Broadcasters such as CBS, News Corp.'s Fox Broadcasting, Comcast's NBC and Disney's ABC are now getting fees from cable and satellite operators as well. Nomura said that in 2011, the big four broadcast networks took in almost $400 million in so-called retransmission consent fees, more than twice what they made in 2010. In 2012, the figure is expected to double again to $750 million. Nomura said Fox and CBS are the most aggressive among broadcasters.

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-- Joe Flint

Photo: San Francisco 49er players celebrate. Credit: Marcio Jose Sanchez/AP.

 
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