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Networks Want High TV Prices (They're to Blame For) Investigated
by Karl Bode 12:33PM Tuesday Jun 10 2014
Soaring cable rates are a very obvious two way street. On the one hand, you've got broadcasters raising prices for programming at every possible opportunity. On the other hand, you've got cable companies who blame broadcast companies for all of the rate hikes, then immediately proceed to jack your bills up higher with a bevy of fees, DVR rental hikes, etc. Nobody in the pay TV ecosystem is blameless when it comes to socking it to consumers, but both sides of the equation like to pretend they are.

Case in point: the big four networks have formed a group called TV Freedom, which this week sent a letter to Congress (pdf) asking them to investigate the soaring TV prices they themselves play a giant role in. The group, whose membership is padded with smaller groups to give the illusion of diversity, pretends to speak "on behalf of pay-TV consumers across the country." The letter blames cable operators solely for soaring TV rates:
quote:
Pay-TV industry-wide practices, such as erroneous overbilling, equipment rental fees and inflated or unnecessary ‘extra’ charges, are the result of an uncompetitive market structure and all contribute to rising monthly cable and satellite TV bills for America’s consumers nationwide. Given the Committee’s current focus on video marketplace successes and failures over the past decade, and the ongoing debate on how best to promote competition, consumer choice and technology-driven advances in the broadband ecosystem, we strongly recommend that the Committee consider fundamental industry-wide reform to facilitate lower monthly pay-TV bills for the American consumer."
While below the line fees, soaring equipment rental rates and other added costs are part of the problem, broadcasters obviously only want lawmakers to focus on half of the problem, and probably wouldn't like it if Congress were to quite justly point fingers at all guilty parties (cable, broadcast and consumers who refuse to cut the cord or cut services) or specifically the ugly battles over retrans rates. Amusingly, the networks tried to get eight consumer groups to sign off on the letter and none of them agreed.

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elefante72

join:2010-12-03
East Amherst, NY

Below the line truth

This cartel still wants you to smoke pot, they just don't want you to know that of the $10 joint, $8 is in delivery and $1.80 is in product, and the farmer gets 20 cents. Fair trade man....

The ONLY reason they are interested in transparency, is because recently operators began charging "below the line" fees for broadcast operators. If you walked up to 100 American's I bet a vast majority of them think that the broadcast channels cost them no money in their cable bill. Hello.

This same cartel blocks their product if you don't have a cable subscription. Buy my ink, or we shut off your printer.

I have zero love for the networks, and the billions they throw at sports teams and blathering reality shows. They have been riding the coattails of bundling--which in almost any other company is illegal for some 30 years.

The fact that the retrans ponzi scheme exists (operators get more eyeballs, hence more ad revenue, and then turn around and charge them to do it), obviously flies in the face of reality that only legislation can provide.

Killa200
Premium
join:2005-12-02
Southeast TN
Reviews:
·Charter

1 edit

I've got an answer!

Ive got an answer for the 4 big guys involved in "TV Freedom", specifically:

ABC Television Affiliate Association
CBS Television Affiliate Association
FOX Television Affiliate Association
NBC Television Affiliate Association

Go back to being must carry, which you should be forced to do anyways given you ride billions of licensed spectrum for free, and shut the hell up when your not being paid by Cable / Telco / Fiber / Satellite providers to carry what you give away for free. Must-Carry worked so long for you guys, why isn't it working now? Gluttony sounds like the answer to that question, but I'd love to hear your excuse.

I love this little line on their FAQ, which i can promise you is untrue:

"Are retransmission consent fees the reason for rising cable bills? No. In fact, retransmission consent fees make up only two cents of every dollar for pay-TV provider’s operating costs."

A) Yeah, the only way that comes close to panning out is if that is 2 cents per network. Carry 8 networks? then that $0.16 of every dollar. 16% of your entire revenue for 8 channels? Sounds like a deal to me!

B) The only way two cents a network pans out on average is if that is based on 2 cents per dollar from the next highest or highest package price. Its definitely more than "2 cents a dollar, per network" if that is based on some $30.00 a month lifeline package.

PlusOne

@50.182.54.x

1 recommendation

Re: I've got an answer!

I have an answer too. Stop paying actors $1million per episode for bad TV. That should lower costs of TV shows.
Mr Guy

join:2014-05-06
USA

Re: I've got an answer!

said by PlusOne :

I have an answer too. Stop paying actors $1million per episode for bad TV. That should lower costs of TV shows.

That's rare for actors to get that and those that do are part of shows that get good ratings which make that revenue up in more ads dollars. The Big Bang Theory makes $6.5 mil per episode in advertising
biochemistry
Premium
join:2003-05-09
92361
Must carry has (almost?) never been utilized for the 4 big broadcasting networks. Only the cruddy independent stations who otherwise would have no chance of getting on the cable lineup actually invoke must carry.
--
isheavenforreal.com

Killa200
Premium
join:2005-12-02
Southeast TN
Reviews:
·Charter

2 edits

Re: I've got an answer!

We had must carry on on the major networks all the way up till 4 years ago with the last contract renegotiation. Id say there are plenty of other places that were the same way.

Things I also wish would happen is the FCC getting rid of TMA rules for cable companies that have affiliate using retrans consent. We live right in the edge of two different markets, and if I have to pay these broadcasters to take their ad laden crap, I might as well be able to pick what I take from either of the two markets I can access. Half our customers want the north market we are not allowed to carry, and the other half the south market we are restricted to carrying.
biochemistry
Premium
join:2003-05-09
92361

Re: I've got an answer!

You must be the exception. Who owns your local big 4 stations?
--
isheavenforreal.com
Skippy25

join:2000-09-13
Hazelwood, MO
Not sure where you go this information. You may want to do a little research and correct your post.
davidhoffman
Premium
join:2009-11-19
Warner Robins, GA
kudos:3
The previous local broadcaster of ABC in the Macon GA market used to use both designations at the same time. He was must carry, or no retransmission consent money, to some cable operators and retransmission consent, for a fee per subscriber, with other cable operators. He and ABC eventually parted ways.

voipguy

join:2006-05-31
Forest Hills, NY
Years ago, the Networks paid affiliates "Compensation" for carriage of network programs and network commercials during those programs.

Since broadcasters discovered that Retransmission Consent fees could be extorted by stations both large and small, the "Compensation" stopped and "Reverse Compensation" began, with the affiliates PAYING the Networks for carriage of their programs.

So, it is quite fair to lay blame for the status quo on the Networks' doorstep. Affiliates seek larger and larger fees from Cable/Satellite, and the Networks suck them up in Reverse Compensation.

Why does this work? Because they CAN get away with it under current law.

The solution is simple. End "Retransmission Consent" for any over-the-air broadcaster. Networks might pull their signals from stations (that could no longer afford to pay Reverse Compensation), but other programmers will realize that the airwaves are still there to reach consumers with ads.

Short of ending RC, an end to "Buy Through" would help. Did you know that if you buy cable television, you MUST BUY the off-air must carry and retransmission consent stations before anything else? How about a cable service with only cable services? Get broadcasters with your antenna, for free, if you want them.

An end to Market Exclusivity would help. If the local ABC affiliate charges too much, a cable provider could buy the signal from a more distant one. This is currently not allowed.

To sum up, the current RC regime is all about extortion facilitated by law.
vpsj

join:2012-09-10
Plainville, CT
Thank you. I engineered a full power TV station in the NYC market. It was must carry that kept it alive. When must carry was repealed in the 1990's(?) the station went dark, until the law was once again invoked. I spent days installing flawless receiver systems at cable company's headends to be included. The cable companies were no help. We were just happy to be in the line-up. It was never dreamed that we could be paid to be included!

Killa200
Premium
join:2005-12-02
Southeast TN
Reviews:
·Charter

Re: I've got an answer!

said by vpsj:

The cable companies were no help. We were just happy to be in the line-up. It was never dreamed that we could be paid to be included!

Id kill to have engineers like you on the other side. Most of the affiliates I run into here treat it like "pay us and figure it out yourselves". Finding a warm body with tech knowledge of their systems is the highlight of my day. I find the smaller the broadcaster, the better off I am.

If your a small guy looking for eyes you dont even have to be free. If your content is good I'll find you a spot somewhere and swing you a little for the opportunity. The prices the big guys are asking though... its just grotesque.

Anon Cabler

@71.171.99.x
In most major markets cable/telco/satellite have to pay at least $1 per month per customer, which is $4 adding them all together. The avg cable bill is $75, of which about half is programming fees, so 4/37.50 is just over 10%. That said, these fees are new, so they represent a greater share of the rate increases than other channels.

NOYB
St. John 3.16
Premium
join:2005-12-15
Forest Grove, OR
kudos:1

The Real Solution


Cut the cable (cord). I did last month. Bought an antenna and network attached tuner, and set up an HTPC with WMC for live TV pause and "DVR" capability.

maartena
Elmo
Premium
join:2002-05-10
Orange, CA
kudos:3

Re: The Real Solution

Yep that is what I did. I ripped the DirecTV dish off the roof, put an outdoor antenna on the same mount, attached the very same DirecTV cable, and *poof*, over a 100 free channels. 40 or so in English, 20 or so in HD, and all the main networks come in *crystal clear*. One cable goes to my PC with TV tuner, and it acts as media server and DVR.
--
"I reject your reality and substitute my own!"
wahoospa

join:2006-03-23
Charleston, SC
I cut the cord and changed ISP's about 5 years ago. All we now have is OTA TV and high speed internet. All we need is provided thru the internet and the air ways. Get weekly snail mail from Comcast and AT&T. You know what? The county recycle trucks pick it up every other week from our recycle bin.
Timmn

join:2000-04-23
Tinley Park, IL
That's what I did also, except I had a 30 year old UHF/VHF antenna in the attic, I ran new coax to it, and I pick up over 70 channels.
WhatNow
Premium
join:2009-05-06
Charlotte, NC

Re: The Real Solution

Wish I had that option I am 100+ miles from all but one station.
Timmn

join:2000-04-23
Tinley Park, IL
Reviews:
·DIRECTV
·AT&T U-Verse

Re: The Real Solution

My Grandmother, back in the late 1960's lived in a town where you couldn't get any TV at all unless you put an antenna on to of a 50 foot mast. The people of the town got together, bought some property on the highest point in town, and put up an antenna on a 100 foot mast. and wired the whole town. She paid $3 a month towards upkeep on the antenna system, I'll bet that wouldn't even be possible to do today.

jmn1207
Premium
join:2000-07-19
Ashburn, VA
kudos:1

1 recommendation

No Real Choices for Customers

If customers were able to directly purchase TV channels, even if only segmented into large content provider channel groups, such as Disney, Viacom, etc, this would help to control the high prices. There is simply no competition to control pricing.

The problem is that all of the negotiations are done between the content providers and the TV providers, and the customer's only impact on this business model is either to pay for TV services, or not pay for TV services. We don't get to influence the market with regards to supply and demand, and what we have is artificially high prices with only the illusion of value being represented by hundreds of extra channels and tons on demand content that would never be able to survive at these prices if a conventional free market was available.

maartena
Elmo
Premium
join:2002-05-10
Orange, CA
kudos:3

1 recommendation

Re: No Real Choices for Customers

said by jmn1207:

If customers were able to directly purchase TV channels, even if only segmented into large content provider channel groups, such as Disney, Viacom, etc, this would help to control the high prices. There is simply no competition to control pricing.

This is one of the reasons I skipped that step (picking channels a-la-carte) altogether, and went with the next step: Picking programs a-la-carte. And that works even better, plus saving me heaps of money of all the programs I didn't want in the first place.

Now my TV viewing habits have completely changed from "whats on (the DVR) tonight?" to "what do you want to watch tonight?" - and being able to pick and choose individual programs from Netflix, Hulu, Amazon, and others.
--
"I reject your reality and substitute my own!"
DigitalManny

join:2014-01-08
Glendale, CA

Broadcasters raising prices for what?

For reality shows? Almost all the networks I get on cable they all broadcast Reality Shows and like 4-6 scripted shows if lucky I find more scripted shows on HBO, Showtime, Cinemax and Starz. Look at SyFy Network aka Sci-Fi a network that use to have scripted shows all Sci-Fi but after name change pointless amount of reality shows, B movies from shitty Asylum and Wrestling so tell me how much does this cost the network especially the network does not even show Sci-Fi shows anymore.

Yeah I want to know which idiots are watching all this reality shows that it is showing any ratings it is like the movies now endless amount of pointless remakes, reboots, re-imaging and PG-13 movies where most of this movies are written by kindergarden students. Clearly todays generation have Aspergers or A.D.D. that this types of TV Shows or Movies keep getting made and money wasted yet this Networks are bitching about cost.
BosstonesOwn

join:2002-12-15
Wakefield, MA
Reviews:
·Verizon FiOS

Re: Broadcasters raising prices for what?

The people watching reality shows are the fools who buy all cart loads of food at the market while most of us half quarter carts.

The thing is they are so low cost to make that they don't have to have big ratings to stay on, just have to make decent profit.
--
"It's always funny until someone gets hurt......and then it's absolutely friggin' hysterical!"
WhatNow
Premium
join:2009-05-06
Charlotte, NC

Re: Broadcasters raising prices for what?

I heard a news program saying scripted shows are coming back. The final for American Idol did not have that many viewers. Next year they are going to just one day a week from two days this year.

PacW097

@97.113.7.x

Re: raising prices for programming

One of the problems I see is that programming really means the package available from the media companies. Look at the leverage of a package, want kids shows then buy these sports packages to get a better rate, want the sports package then buy these kids shows.

I don't want either I just want those 17 channels consumers presumably want without all the extra bloat programming but can't get those as stand alone packages - for my content provider, the folks putting the picture on my screen they have no incentive to sell a la carte because they don't buy it a la carte.

It's a viscous cycle of outdated business models selling packages, which then resell packages and controlling what's on our screens.

Raising the price for programming is misleading as actual viewing consumers don't have a choice. We MUST buy a package, because they were sold a package.

Flyonthewall

@206.248.154.x

Idiot Box

It's called that because you have to be an idiot to continue to pay what they charge for the garbage they give you. It's like paying for steak at a 5 star Hotel and being served McDonalds. Who would tolerate that knowingly unless messed up in the head?

maartena
Elmo
Premium
join:2002-05-10
Orange, CA
kudos:3

Re: Idiot Box

said by Flyonthewall :

It's called that because you have to be an idiot to continue to pay what they charge for the garbage they give you. It's like paying for steak at a 5 star Hotel and being served McDonalds. Who would tolerate that knowingly unless messed up in the head?

Sports. People tolerate it because all the other crap on TV does not outweigh the ability to watch their favorite sports teams.

I figured out that with $30 for Hulu, Netflix, Amazon, and a SmartDNS I could save almost a THOUSAND dollars a year off my DirecTV bill, but I would have to give up sports. The thousand dollars a year savings won in my case, but for many, sports is worth it.
--
"I reject your reality and substitute my own!"
WhatNow
Premium
join:2009-05-06
Charlotte, NC

Re: Idiot Box

Sports is about to make me cut the cord.

The cable companies are between a rock and a hard place. People are still complaining about Uverse dropping Hallmark.

It seems every program I like gets canceled after the first year.
AVonGauss
Premium
join:2007-11-01
Boynton Beach, FL

Pot Calling The Kettle Black...

I guess they think consumers and the government are complete idiots, which is a tad insulting but given how easy of a ride NetFlix is being given lately I guess it shouldn't be a surprise. I think this is a great first step, next we should talk about things like channel bundling, re-transmission rates for OTA broadcast channels. That's not to say pay TV providers aren't having a party too...

Ultimately though consumers are truly the ones to blame. In a free economy, when a service offered becomes overvalued by the provider(s) the consumer needs to be willing to not accept the service and seek alternatives, even if that means doing without an optional service. Yes, you can live and flourish without pay TV...

Morac
Cat god

join:2001-08-30
Riverside, NJ
kudos:1

NBC

I notice the NBC affiliates are part of the group, but not NBC itself. Makes sense since NBC is Comcast.

Makes me wonder how Comcast blames broadcasters for increased rates, when a quarter of that blame falls on themselves.

maartena
Elmo
Premium
join:2002-05-10
Orange, CA
kudos:3

Re: NBC

said by Morac:

I notice the NBC affiliates are part of the group, but not NBC itself. Makes sense since NBC is Comcast.

Makes me wonder how Comcast blames broadcasters for increased rates, when a quarter of that blame falls on themselves.

I'm still waiting for TWC to make a comment on how expensive the Lakers and Dodger channels are.

Oh, wait....
--
"I reject your reality and substitute my own!"

maartena
Elmo
Premium
join:2002-05-10
Orange, CA
kudos:3

Not just channel owners and/or carriers....

There is a HUGE 3d party not mentioned in the article responsible for programming costs: Sports teams owners.

The biggest example right now are the Los Angeles Lakers and the Los Angeles Dodgers. Both of them signed a deal with Time Warner Cable for 20 years of broadcast rights, the Lakers for about $5 per subscriber, and the Dodgers for about $4 per subscriber.

It must be noted of course that in this case, TWC made the deal as a channel OWNER, not as the CARRIER, but we all know of course that TWC does not have to negotiate their own network for carriage.

Regardless, the Sports Team owners are partially responsible for programming costs. Granted, TWC is making the offer for so many BILLION dollars, but the teams also DEMAND that kind of money. 3 years ago the Angels signed a new broadcast deal for 3 BILLION dollars (the Lakers deal is said to be worth 4 BILLION), with part of that money (paid by the broadcaster) to be set aside to sign a deal with Pujols, and sure enough, he signed a 250 Million dollar contract for 10 years.

The Angels are charging roughly $3 per subscriber, Clippers is about $2, and Kings/Ducks each are good for about $1.50 per subscriber. Then there is two MLS teams as well.

In any case, a Los Angeles based viewer, will pay roughly $16 per month to see the local teams, where someone may only be a fan of say.... the Angels, and don't really care about anything else.

Add to that the cost of ESPN, Fox Sports, NBC Sports, etc, and the costs per subscriber for sports in Los Angeles probably is closer to $25-$28, and with a little profit to go to the cable and satellite companies, about $30 of your cable/satellite bill.... is purely for sports. (Note: The TWC Dodgers channel has not signed a deal with ANYONE yet, and they are asking $5 per subscriber).

And we just have to accept all 8 major league teams and associated costs. The big providers were sort of pushed to carry the Lakers channel, because it is the most popular sport franchise in the L.A. area (note I said most popular, not biggest in money/value) and people were holding up TWC SUCKS signs at the Lakers games in the first few weeks before DirecTV got a deal.

In any case, the exorbitant amounts of money going on in sports, the extreme salaries (a top player should make 3 million a year imho, not 30 million.), and the greed that sports teams have also have contributed in these mega TV deals. People bought the Lakers. Dodgers.... not so much, and TWC is going to be stuck with only having their OWN customers to charge for that big fat bloated overpaid deal.

It's insane. Cable prices are going up about TWICE the inflation rate each year, in some cases THREE times as much.
--
"I reject your reality and substitute my own!"

••••••
Mystic95Z

join:2005-05-10
Sellersburg, IN

One more month....

And my DTV contract is up, cant wait to rip the dish off the roof and put a HD antenna up...
giffordj
Premium
join:2001-07-03
Fontana, CA

High Prices - Why Assume no rental charges for equipment

I know a lot of people out here in Southern California, see the low rate, then when the get ready to switch they find out about the equipment rental costs. There is an assumption that a basic 2 tv house should be included with no rental charges. I wish that was the case.