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Time Warner Cable’s Roll Over or Get Tough campaign was tailor-made to bolster the company’s defenses as the deadline nears for the nation’s second largest cable operator and Fox to reach an agreement on carrying Fox-owned stations in the new year.
For sports fans, the relentlessly ticking 24-like clock may run out on some important football games airing on Fox on New Year’s Day, requiring viewers to pull out the rabbit ears and settle for whatever over-the-air signal they can get. At the moment, the two companies remain far apart in reaching a settlement over exactly how much Time Warner Cable will have to pay to carry Fox affiliates in some of the nation’s top TV markets.
Fox wants a reported $1 per subscriber per month. Time Warner Cable prefers to pay nothing for Fox broadcast stations — the cable industry typically cuts deals to carry network-owned cable channels for which they will pay. That’s how many Time Warner Cable customers ended up with channels like Sleuth, CNBC World, and other little-watched NBC-Universal cable channels just to smooth the way for retransmission consent for NBC-owned broadcast affiliates. Fox shoved the dismally-rated Fox Business News and several regional sports channels onto many Time Warner Cable systems to win retransmission consent deals with higher-rated Fox networks just a few years ago.
Now Fox insists on cash money for carriage.
News Corporation’s Rupert Murdoch, who runs the company that owns Fox, has been making plenty of noise this year about the “business model” of broadcast television being broken in the United States. Murdoch wants everyone to pay for News Corporation content, be it online from the Wall Street Journal or on your local cable system where the Fox family of cable and broadcast networks occupy at least a half-dozen channels on the lineup.
The level of nastiness has approached that of last year’s vicious battle with Viacom over how much Time Warner Cable would pay for channels like Nickelodeon, Comedy Central, and MTV. Last year the low point was achieved when Viacom ran full page newspaper ads with a crying Dora the Explorer lamenting the fact she was about to be ripped off the television screens of millions of cable customers.
Time Warner Cable hopes its preemptive strike will earn it some peace and understanding when upset subscribers call the cable company to complain about the loss of Fox on their cable dial. After all, you did want them to “get tough” with those nasty programmers, right? Time Warner Cable has pointed the finger specifically at Fox in the newest round of attack ads, and Fox returned fire with a new slap against Time Warner Cable.
http://www.phillipdampier.com/video/Time Warner Ransom Ad.flvTime Warner Cable characterizes a missed deadline in the dispute as the equivalent of Fox taking your TV hostage.
http://www.phillipdampier.com/video/Fox Ad Targets TWC.flv
Fox returns fire with another direct shot at Time Warner Cable in their latest ad.
Meanwhile, local newscasts around the country are sporadically updating viewers about the fight. Because football is involved, amazing efforts are underway to force the two to reach an agreement, or at least leave the games on. One Orlando attorney is filing a lawsuit to get an emergency injunction to make sure Orlando’s WOFL-TV stays on Bright House Networks. That cable company is being represented by Time Warner Cable over the Fox matter.
http://www.phillipdampier.com/video/WESH Orlando Bright House Fox Battle Sugar Bowl In Between 12-28-09.flv http://www.phillipdampier.com/video/WFTV Orlando Contract Dispute May Keep Gator Fans From Watching Game 12-28-09.flvBright House Networks in central Florida is also impacted by the Fox-Time Warner Cable stalled negotiations. WESH-TV and WFTV-TV in Orlando report on the major impact the loss of WOFL-TV – Orlando’s Fox station, would have on area sports fans. (WESH-2 minutes WFTV-3 minutes)
http://www.phillipdampier.com/video/NY1 Time Warner Fox Dispute 12-28-09.flv
Time Warner Cable’s Alex Dudley, familiar to Stop the Cap! readers from the cable operator’s effort to launch a major Internet Overcharging scheme on customers last April, is back in a decidedly pro-Time Warner piece on the cable company-owned NY1. Dudley can’t resist taking that last shot at Fox, pointing out impacted customers can always watch a lot of Fox programming for free online, thanks to Hulu. (3 minutes)
With these kinds of battles becoming increasingly contentious, Time Warner Cable CEO Glenn Britt hinted the cable operator may look at offering customers more choice in what channels make up a subscriber’s package. Consumers have howled for years over rate increases that outpace inflation, as cable operators keep expanding the number of channels on offer, and keep raising the rates to pay for them.
“People want more choice, and collectively, we should be responsive to that,” Britt said at a investor conference in New York City. “I haven’t been a big fan of a la carte. The economics don’t work for the programming part of the business and ultimately don’t work for consumers. They do like to buy packages, maybe not as big as the packages we offer now, but they do like packages.”
“The comments are pretty consistently saying, ‘We would like the choice to buy smaller packages,’” Britt said.
The cable industry has traditionally resisted true a-la-carte pricing, which permits customers to choose and pay for only the channels they wish to watch. Basic cable networks depend on both advertising revenue and the subscription payments they charge every customer who can watch their channels. With the millions of cable subscribers pooled together, the cost per subscriber for each channel is usually less than 50 cents per month. Letting subscribers opt-out increases the prices networks have to charge to those still receiving the channel. Many niche networks would likely not survive such a transition. The cable industry also argues it would force every subscriber to rent a set top box or similar device for every television in the home, as every channel would have to be scrambled. Billing costs would also be higher.
Britt’s suggestion that Time Warner Cable could look into adding more “packages” of programming could resemble how C-band satellite dish owners paid for their programming. Before the days of DISH Networks and DirecTV, millions of Americans placed large satellite dishes (typically 10-12 feet in diameter) in their yards to receive satellite-delivered programming. When programmers encrypted their signals, satellite dish owners purchased programming in mini-packages comprising a handful of channels. Some packages were theme-based — news packs with CNN, Headline News, MSNBC, Fox News, and CNBC for $5 a month or company-based, such as a package containing channels formerly owned by Ted Turner or those from Scripps-Howard (HGTV, Food, Style, etc.) for a few dollars a month. Most subscribers paid for a “basic package” of popular basic networks grouped together and then added on more expensive premium channels or sports channels individually. It often didn’t make economic sense to purchase each channel individually because of their relative high cost, but consumers could save quite a lot excluding some of the most expensive channels from their lineup (especially sports programming).
Whether Britt would follow through with the threat of “mini packages” is open for debate. Any savings consumers realize from such offers would reduce Time Warner Cable’s revenue per subscriber, and that’s a sure fire way to upset Wall Street.
Watch more video and learn how Time Warner Cable customers nationwide may be facing the loss of Fox-owned cable channels, even if the local broadcast affiliate stays put. We also have a more in-depth report on why retransmission consent agreements are increasingly important to broadcasters and pay television operators, all below the page break.
http://www.phillipdampier.com/video/WSYR Syracuse Time Warner Fox 12-28-09.flv
WSYR-TV in Syracuse features “The Real Deal” on Time Warner’s negotiations with Fox. In central and western New York, where Fox stations are not owned by Fox, the local Fox station will remain on the cable dial, but Fox’s cable channels may not. (2 minutes)
http://www.phillipdampier.com/video/WOAI San Antonio Fox Time Warner Negotiations 12-28-09.flv
WOAI-TV San Antonio covers the Fox dispute which could force Fox Sports Southwest and other Fox cable channels off Time Warner Cable by late this week. (1 minute)
http://www.phillipdampier.com/video/CNBC Richard Greenfield TW Fox Dispute 12-18-09.flv
CNBC aired this interview with Richard Greenfield about why retransmission consent disputes have become more heated lately, and where the one between Time Warner and Fox may be heading. (12/18/09 — 6 minutes)
Other stories of interest:
- Pondering Glenn Britt, CEO of Time Warner Cable
- Time Warner Cable Wants You To Help Fight “Unfair” Programming Prices, But Won’t Let You Choose Your Own Channels
- Time Warner Cable Merrily Raising Your Rates This Holiday Season Even While It “Gets Tough” On Costs
- Time Warner Cable CEO Reports Basic Cable Suffers While Broadband Gains, Still Thinks ‘Usage Based Pricing’ is the Future
- Fox Returns Fire on Time Warner Cable Over Its Roll Over or Get Tough Campaign
I hope it does go the a la carte route. We need major change and competition with content providers. I bet it would drive down prices plus it would get rid of crap channels like HSN or at least make them free to get. Also, new channels could offer themselves as free, at first, to get subscribers. Lets face it, with commercials, they are still making money regardless. What they are doing now is double dipping. Anyway, that is my opinion on all of this crap.
Come on a la carte. Fox, History, a sports channel or two. Should cut my bill down considerably. I think I should get paid for half the crap the send down that dumb pipe they want so much for.
I would like to ditch EWTN and TBN
TWC will not do it if it saves any of us money. Come on, this is Glenn Britt talking. He would find a way to make it increase our bills, even though I would like to see a la carte like anyone else.
If Glenn Britt adds “smaller packages” it would also be an improvement, though it would still end up costing more. Lots of small packages sold for way more than they are worth will add up quickly, and I’m sure Britt will be quite happy with the way it would increase the cable bills he’s whining about losing to the internet.
If I am able to reduce my cable bill by getting rid of those sports channels, I would personally deliver roses to Glenn Britt and apologize to his face, because until it happens I refuse to believe it.
Even if we lose Fox tomorrow I am sure TWC will still continue those price increases going around lately too.
Someone needs to ask this. Lets say they yank all these channels off the air. Will they reduce the bill by the same amount? Oh they wont? Thought so…
Not that I care I cut the cord on that one ages ago. Loving my extra 700 bucks a year
Also the ‘a la carte not working because it will cost more’ is a bit misleading. Like the combo meal at ye ol fast food restaurant you can get a cheaper meal even if you do not take it. I do this all the time. I get a burger and fries no soda. Sure for only ’30 cents more’ I could get a soda but I am not saving money that way for something I do not really need.
The real reason we will never see a la carte programming has nothing to do with helping the consumer, or that it is technically feasible. It is about wall street. The company is built around 50-70 a month per customer. The wall street expectations of growth etc are built around that. There is only 2 ways they can sustain a 10% YOY increase in profits (that they probably ‘promised’ to investors). That is to increase prices to their locked in customer base. As at this point most people who want cable have it.. The other is to actually lower their operating costs (by firing higher priced employees and or using better tech). If they took say a 5% decrease in gross profit because of a la carte they would get creamed on WS (even if say ‘net’ was the same). The upper execs would *never* chance it. The CEO would need two-three years prepping that one, and then need to be spot on with the numbers (preferably beating them). TW has shown they are willing to jam us customers and then use us to twist providers arms when it is convenient. The leadership at TW doesnt have the cajones to do it. They would rather play us both ways and squeeze even more money out of us.
I also told them to ‘roll over’. Guess what you couldn’t tell them that. I just wanted to see what would happen. It would take you back and ask you again saying ‘are you sure?!’. Very disingenuous of them.
I understand that they don’t want to force their subscribers to pay a little more for Fox which I understand. But while this battle over mere cents is going on, TWC decided to raise my regular Roadrunner Standard package a few dollars with little to no fanfare. If any part of their business is actually costing less to provide, it would be the internet service.
I really think a la carte would work. Yea we all could speculate that it would cost more but how will we know if we don’t try? Personally, I think it would cost less. It would give consumers more power over these content providers. I think prices would be more competitive than they are now because let’s face it, they keep going up not down. It would get rid of a lot of crap channels that no one needs to pay for. When you have the average viewer only watching 15-17 channels and getting even a 100 channel package, they are paying a lot more than necessary since they are not using 85 channels. I think it is a win-win for the consumer. If the model doesn’t change, more and more are going to go the internet route. Wall Street, who cares about them? It is the consumers that have the real power. Once people start migrating away from cable and going internet, the gravy train will be over. I hope it is sooner rather than later. It is reaching ridiculous proportions.