Why You Shouldn’t Just Blame Your Cable Company for that $200 Bill

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Like the older sibling who seems to be blamed for everything, cable, satellite and telco TV providers caught scrutiny Tuesday after research firm the NPD Group released a report forecasting that the average multi-channel subscription bill will spiral to around $200 by the end of the decade.

Aren’t these guys smart enough to know that they’re forcing consumers to consider internet-based on-demand programming options? Well, they’re not necessarily driving the bus in terms of spiraling subscription costs, the program suppliers are.

According to a Nomura Equity Research report released Monday, fees paid by cable, satellite and telco distributors to program suppliers increased 8.2% last year to around $33.5 billion. And they’re  likely to increase around 8% for each of the next several years going forward, surpassing $39 billion by 2013.

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Nomura reports that four media conglomerates account for 75% of this fee structure, with the Walt Disney Company controlling an industry-leading 24% of the pie. Notable: Disney distributes ESPN, which has far and away the highest carriage fees in the multi-channel business, taking an average of $4.69 from each U.S. multi-channel subscriber.

The other major stakeholders: Time Warner, which houses HBO, TNT, TBS and CNN (and also owns TIME), controls 21% of affiliate fees; Comcast, owner of Bravo and the USA Network, accounts for 16%; and News Corp., owner Fox News, saps up 14% of fees. (Notable, of course: Comcast also runs the country’s biggest cable operators, touting more than 22 million subscribers.)

And it’s not just carriage fees for cable networks that are spiraling upward. Nomura reports that re-transmission fees paid to broadcast network affiliate stations totaled nearly $400 million in 2011 and should reach $750 million this year.

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Republished with permission from paidContent, which writes about the transformation of the media-and-entertainment industries in the digital era, with a focus on emerging-business models and technologies.

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1 comments
victoria123
victoria123

I find it a little silly that an article that tries to say that cable companies aren't the reason bills are so high ends up saying 37% of the fees come from two of the largest cable companies (Time Warner and Comcast) that also own TV channels.