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NAB Takes Pot Shot at Time Warner Cable Earnings
Argues Carriage Fees Account for Less Than 1% of Cable Bill
by Karl Bode Friday 27-Jan-2012 tags: prices · cable · consumers · Time Warner Cable
The National Association of Broadcasters is highlighting Time Warner Cable's 44% jump in net profit as an example of how retrans fees aren't hurting the cable operator quite as badly as claimed. 2011 saw broadcasters and cable operators annoy consumers endlessly with blackouts, PR feuds, and higher rates, with cable operators often claiming demanded rate hikes were borderline gluttonous. A NAB press statement however argues that retransmission consent fees accounted for just six-tenths of one percent of a pay-TV operator's revenues in 2010. Says NAB:

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"Given that Time Warner Cable just announced a quarterly net income increase of 44 percent and annual profits of $1.3 billion, it's time for pay TV's poster child for skyrocketing rates to come clean on retransmission consent. Time Warner and its front group the American Television Alliance claim that broadcast retransmission consent fees are responsible for escalating cable rates. That claim is false. The fact is that local TV station carriage fees account for less than 1 percent of the cost of a monthly cable bill.

...it's laughable to suggest that broadcasters are responsible for higher cable rates.

With ESPN as expensive as it is, it's pretty "laughable" that NAB would suggest programming costs don't play a role, even if the cable industry likes to play up their impact to justify bi-annual rate hikes (even on DVR rentals). On Twitter, Ted Hearn of the American Cable Association tweets that comparing retrans fees to all revenues (including broadband, VoIP) is an apple to orange comparison, though it does appear NAB at least tries to compare the retrans impact to pay-TV revenues specifically.

At this point consumers don't really care, nor do they particularly like either side in these debates. In the end, most consumers know their cable bill will keep going up regardless of who "wins" these increasingly-ugly retrans disputes. Why? Because the cable and broadcast industry absolutely refuse to seriously compete on price, must get improved quarterly results however possible, and as a result would blame rate hikes on Uruguayan Ocelots if they could get away with it.

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pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD

#OccupyTimeWarner

Looks like the NAB thinks the "attack their profit" angle is a winner. But of course they do it only because it might actually resonate with some people.
--
"Net Neutrality" zealots - the people you can thank for your capped Internet service.

nothing00

join:2001-06-10
Centereach, NY

Re: #OccupyTimeWarner

Karl,

"laughable to suggest that broadcasters are responsible"
and
"ESPN as expensive as it is, it's pretty 'laughable' that NAB would suggest programming costs don't play a role"

ESPN isn't a broadcaster.

voipguy

join:2006-05-31
Forest Hills, NY

1 edit

Re: #OccupyTimeWarner

ESPN is not a broadcaster, but ESPN's owner is ABC/Disney, which is a broadcaster.

Broadcast station carriage agreements are very often tied to cable network carriage.

Something to note - Broadcast networks used to pay their affiliate stations to carry them. Now, because of all the money the stations are bringing in from Cable and Satellite retransmission agreements, the networks demand the stations to pay them!

One day, the Broadcast networks may realize they can get a better deal by going directly to the cable operators and then the station owners will be left with nothing but their local news to pay the bills.

I used to think the fair thing to do was allow the cable operator to carry out-of-market stations instead of the local ones to get network programming if they wanted to. Now, I realize that the network would just charge that remote affiliate more to compensate, or void their affiliation just to punish them.

The simple way to fix it? END retransmission consent. If a broadcaster wants to negotiate carriage like a cable network, they should return their FCC license and get off the public airwaves, and give the license to someone that wants to BROADCAST (or better yet, save it for broadband use). Without the fees from cable subscribers, the broadcast networks and stations would rely upon advertising only again. With today's multichannel capabilities, they have more than enough resources to make this pay for them. (Although must-carry for the subchannels could be a reasonable demand to ask from the cable operators).

Now, some are even talking about paying the broadcasters to voluntarily turn-in their frequencies for cellular broadband use. That would be like paying Exxon to stop drilling off the coast, or paying Wayerhouser to stop cutting trees in a national forest. TV spectrum is a public resource, GIVEN to the broadcasters FOR FREE. They used to have public service responsibilities. Not any more. Insanity.

skuv

@rr.com
ESPN doesn't broadcast their signal via satellite down to cable, satellite, and telco TV providers?

Interesting. I wonder how they get the signals?
Kearnstd
Elf Wizard
Premium
join:2002-01-22
Mullica Hill, NJ

Re: #OccupyTimeWarner

That is not broadcast.

Broadcast in Television terms means freely accessible via Antenna.

WABC channel 7 for example is Broadcast.
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[65 Arcanist]Filan(High Elf) Zone: Broadband Reports
Zen6

join:2011-06-04
Saratoga Springs, NY
Looking at the numbers it appears as though business data service was a big winner. The cable end of their business looks to be declining.
axiomatic

join:2006-08-23
Tomball, TX

don't give a crap

I don't give a crap what NAB or TW's issues are. The fact remains that customers pay the price in these little retransmission spat's is completely inexcusable. Paying customers are not a bargaining chip.
mogamer

join:2011-04-20
Royal Oak, MI

Re: don't give a crap

said by axiomatic:

I don't give a crap what NAB or TW's issues are. The fact remains that customers pay the price in these little retransmission spat's is completely inexcusable. Paying customers are not a bargaining chip.

Exactly! This is nothing more than a spat between a slimeball and a scumbag.

BF69
Premium
join:2004-07-28
Camden, TN

Re: don't give a crap

No one is forcing either of you or anyone to subscribe to cable. Maybe if more people like you that are sick of rate hikes would cut the cord they would lower prices.

G0d

@rr.com

Re: don't give a crap

Your still going to pay for it whether its through your cable company your isp or subscription service. So cutting the cord for the cheap consumer is not going to get you anywhere for much longer. Bandwidth is prime real estate and if cutting the cord takes down cable cos and dish then your isp will just jack up that bandwidth price on that. So its silly to suggest that cutting the cord is the answer. Sorry its just inevitable that you are going to have to eventually pay more.
sonicmerlin

join:2009-05-24
Cleveland, OH
kudos:1

Re: don't give a crap

said by G0d :

Your still going to pay for it whether its through your cable company your isp or subscription service. So cutting the cord for the cheap consumer is not going to get you anywhere for much longer. Bandwidth is prime real estate and if cutting the cord takes down cable cos and dish then your isp will just jack up that bandwidth price on that. So its silly to suggest that cutting the cord is the answer. Sorry its just inevitable that you are going to have to eventually pay more.

Your argument is irrational. If they could jack up the price of broadband so much they would have done so already.

You're suggesting they're currently leaving money on the table. Are you nuts?

mikedz4

join:2003-04-14
Weirton, WV
Reviews:
·Comcast
·Comcast Digital ..

Re: don't give a crap

The cable companies already have higher prices for people with just internet than those with internet and tv service through them. I think the phone companies ALSO charge more for people with just internet through them than those with phone and internet.

G0d

@rr.com
Your off base again. Right now it's the theory that people should cut the cord to make cable cos drop prices. My point is that even if everyone cut the cord they are still going to be paying the same on the other end whether it's the broadband or subscription service. You can't escape raising prices so just get used to it. Your way of thinking suggests that if everyone bought electric cars then gas prices would drop. Maybe but then energy prices would raise and your still paying the same if not more for electricity. C'mon it's common sense here.

aabbccdd

@bhn.net
They are leaving money on the table. So they can take it back when the current model isn't bringing in enough anymore. Futureproofing your business should be the first thing on any Ceo's list.
sonicmerlin

join:2009-05-24
Cleveland, OH
kudos:1

Re: don't give a crap

said by aabbccdd :

They are leaving money on the table. So they can take it back when the current model isn't bringing in enough anymore. Futureproofing your business should be the first thing on any Ceo's list.

Leaving money on the table is grounds for a shareholder lawsuit. You know not of what you speak.

skuv

@rr.com
How are paying customers NOT a bargaining chip?

TWC has 14 million or so cable TV subscribers... broadcasters want to receive money based on these 14 million subscribers.

What OTHER bargaining chip would there be besides the amount of paying customers in this situation!?
axiomatic

join:2006-08-23
Tomball, TX

Re: don't give a crap

Clarification: Not a bargaining chip in the rebroadcasting argument between companies.

Damn you guys are viscous when you perceive the incorrect meaning. Maybe decaf?
Kearnstd
Elf Wizard
Premium
join:2002-01-22
Mullica Hill, NJ
The real issue is that retrans fees exist at all. How is the cable company sending the signal of WPVI(as an example station in bcast range of me) to me any different than me putting an Antenna on the roof and getting their broadcast out of Philly.

I think that is the main issue in these fights is that the stations think the MSOs should pay to send people their programming when the cable company is actually expanding their broadcast area.
--
[65 Arcanist]Filan(High Elf) Zone: Broadband Reports

cblguy

@rr.com

TWC

Fact is TWC is a publicly owned company they are in business to make money for the share holders, most cable companies are only making about 10% of their profit from retransmitting stations most of what you pay to watch TV on cable goes to broadcasters and plant upkeep.

Xizer

join:2004-02-05
New York, NY
Reviews:
·Cox HSI
·AT&T U-Verse

Note the key word here: "local"

"The fact is that local TV station carriage fees account for less than 1 percent of the cost of a monthly cable bill." This is what the National Association of Broadcasters stooge states. It's probably accurate. But pay attention!

They're talking about ABC, NBC, CBS, Fox, The CW and PBS affiliates ONLY! You know, the channels broadcast over the air for free. Of course they don't account for a significant percentage of the cable bill - it's hard to argue that you need high carriage fees when you're handing your shit away for free over the airwaves already!

They're not including the fees national networks charge in that statement. ESPN alone expects to be paid $5 every month for every subscriber. That single channel accounts for 10% of a $50 a month cable bill.

Here's a chart of what carriage fees looked like in 2009 - certainly a lot higher than "1%". In the 3 years since this was created they've only risen higher. ESPN expects closer to 5 now instead of 4, NFL Network wants 81 cents instead of 75, News Corporation channels saw a 40% rate hike since this chart was made, and on and on and on...




It's true that the cable companies charge a lot of money and make some nice profit margins off of television, but there's plenty of blame to go around here.
amungus
Premium
join:2004-11-26
America
Reviews:
·AT&T DSL Service

Re: Note the key word here: "local"

True. Nice link too...

I kind of have to agree with the NAB here in any case, stooges though they may be - broadcast TV has VERY little to do with rate hikes. As the recent story about Cox's new package highlights - which does NOT have ESPN - it proves it is ESPN who accounts for at least $10 on an "expanded" cable/sat type bill.
Skippy25

join:2000-09-13
Hazelwood, MO
That's sad.

Consider that the 6 channels we actually use in my house totals about $5 a month in carriage fees.

Tack on a reasonable transport fee and a la carte looks pretty damn good right now.
davidhoffman
Premium
join:2009-11-19
Warner Robins, GA
kudos:1
Reviews:
·Millenicom
·AT&T Southeast
·Verizon Wireless..
Now we need to have a nice chart like that for a la carte retail prices. I see I could get about 100 channels wholesale for about $20 back then, today it would be about $24. Double that amount to get retail pricing, and I might pay $48/month for 100 channels. Interesting.
Skippy25

join:2000-09-13
Hazelwood, MO

Well you have to admit....

regardless of all this they are charging what they charge and enough idiots (myself included) continue to pay for the services (while we moan and groan about it).

So either they arent charging enough to TRULY upset enough of us to change our ways or many of us have more disposable income then we admit or we are all dumber than originally thought.

mmay149q
Premium
join:2009-03-05
Dallas, TX
kudos:48

Re: Well you have to admit....

said by Skippy25:

regardless of all this they are charging what they charge and enough idiots (myself included) continue to pay for the services (while we moan and groan about it).

So either they arent charging enough to TRULY upset enough of us to change our ways or many of us have more disposable income then we admit or we are all dumber than originally thought.

I would say yes and no, I mean personally I don't watch TV at all, and only buy movies, or full DVD's/Blu-Ray of TV series after they have come out (F*ck commercials I'm not paying $X amount a month to be told what to eat, what to wear, and what to buy for my car) but however since I live with room mates who watch TV quite often I do still incur partial costs for the bill since the bill is in my name and under my account (greater discounts to my cell service this way )

I've been paying for TV service for only 1 year, out of that 1 year my bill has gone up $20 a month, partially due to retransmission disputes like this, and partially because of promo's dropping off after X amount of time. Either way I think it's ridiculous, and I can't wait to move out to be by myself where I don't have to pay for something that I find an utter useless waste of my time, and the cause of 90% of the problems with our country and our society.

Matt
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Snakeoil
Ignore Button. The coward's feature.
Premium
join:2000-08-05
Mentor, OH
kudos:1

Time warner is a bandit. Just like the rest of them.

I am still having trouble getting over te 47 bucks i pay a month just for 2MBs internet service.
FSchmertz

join:2007-07-01
West Milford, NJ

It Gives Me a Warm and Fuzzy

Feeling inside knowing the NAB is in there protecting me from the big bad cable companies!


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