Time Warner Subs: Kiss Your HD Shows Goodbye!

[Skaggs]

Time Warner Subs: Kiss Your HD Shows Goodbye!
Commentary By Swanni, link to story

Washington, D.C. (December 3, 2009) -- If you're a Time Warner subscriber, isn't it bad enough that your cable operator won't carry the NFL Network?

Well, yes it is.

But now, Time Warner fans, be prepared for things to get a lot worse. In fact, be prepared to lose many of your favorite channels and high-def programs.

Why?

Time Warner last week launched a marketing campaign called "Roll Over or Get Tough," in which it urges subscribers to vote on whether the cable operator should, well, "get tough" with networks who are asking for higher programming fees to carry their channels. (The subscribers can vote at a Time Warner web site, rolloverorgettough.com.)

Get tough, you see, means refusing to pay if Time Warner thinks the networks are asking for too much money. And when that occurs, that means that Time Warner won't be able to carry those channels.

Exhibit A: The NFL Network.

The nation's leading TV providers -- DIRECTV, Dish Network, Comcast included -- all have somehow managed to find the money to pay the NFL Network. But Time Warner has, yes, gotten tough and remained tough.

And that's tough for football fans who subscribe to Time Warner.

By urging customers to vote on whether Time Warner should "roll over," which apparently means paying up, or "get tough," which apparently means reducing costs in the vast Time Warner corporate empire, the cable operator is clearly looking to soften the blow when it decides to drop some channels when the programmers ask for more money.

Time Warner is hoping to make customers believe that it will be their decision to drop the channels, not the cable operator's. (By the way, if you vote for "Roll Over," at Time Warner's web site, you get the following message: "Are you sure you don't want to 'get tough?'"

"No one likes paying more," Time Warner says at its web site. "You don’t. We don’t. Yet, every time our contracts with TV program providers come up for renewal, that’s what we face. Price increases. Big ones. Up to 300% more. Sometimes we can avoid passing them on to you. Sometimes we can’t. Sometimes, a network will threaten to take your shows away if we don’t roll over. Whenever that’s happened in the past, we’d make the best deal we could and hope that would be the end of it. But it never was. So no more. The networks shouldn’t be in the driver’s seat on what you watch and how much you pay."

But if you're a Time Warner subscriber -- and the cable operator soon drops your favorite show and/or channel due to a programming fee dispute -- ask yourself if the other major TV providers are still carrying it.

And if they are, then ask yourself why you're still a Time Warner subscriber.

[adam]

Wow. This is total BS. You can't even vote for roll over. The article mentions it but you really can not vote for roll over. I clicked it, it says you sure? and there is no place on the page to say I'm Sure ROLL OVER! Just two links for get tough and one comment field. Ugh.

[mattbanks]

More and more I'm wanting to leave Time Warner for Direct TV. Need to start pushing the wife about having a dish on the roof...

[shanedude]

I am glad to see a big media company like them FINALLY stand up to these network conglomerates who continue to dictate how much us viewers watch and pay. Not only do many of them force every provider to carry certain 'groups' of channels when they try to re-negotiate contracts, but they increase the prices every time they do. . I doubt this along will make a difference but getting the media attention isn't going to hurt! Maybe other providers will stick up and fight against this issue and regulate their own industry a bit better. EVERY provider gets stuck in this battle every time they re-negotiate carriage of networks. Don't let TWC fool you in to thinking they are in this battle alone. I remember when I had dish I lost a bunch of channels (mtv) when I lived in MA. They eventually got em back but I was really upset. And of course it wasn't just 1 channel, there were a few of them. Turned out all to be owned by Viacom?
We the consumers always lose out. Maybe if the service providers were not allowed to own networks this could be reduced. They just fight each other back and forth each time they negotiate carriage agreements.

[shanedude]

btw, I did some searching to see if other service providers are following suit. DTV is fighting a battle with Versus and their 'group' of channels. DTV could of course just say, sure we will pay whatever you want because we don't want our customers to lose any channels. But no, they are standing up and if takes dropping the network and that network losing all the advertising $$ by having that many less potential viewers than so be it. The networks always come back crawling. This is an issue dear to me as I think the entire process is childish. Every time I come across a news article about it it strikes a nerve. TWC, you got my vote. Fight hard!! get my bill down as much as possible. Reminds me of buying a car, if I don't walk out while negotiating at least a few times than I know I am getting ripped off. I don't go shopping for a car to make a friend, I want the best d**n deal I can get..

[econ]

I'm sure that Time Warner has our costs in mind when negotiating prices with various networks.I know that if TW drops a channel that we the subscriber will see an instant reduction in our bills.YEAH RIGHT.The only way we the customer won't get screwed is if cable companies like Time Warner have competition for our dollar.Until VIOS comes to town,Time Warner can name their price and we will pay it because we have no choice.The deal Comcast is making to purchase NBC is just the kind of deal we should be afraid of and complain about.Time Warner is all about their bottom line no matter how they try to paint the picture.

[Chris Miller]

You may want to fix that link. It should be www.rolloverorgettough.com/ not www.rolloverorgetthrough.com in the url tags

Dec 3, 2009 10:07:05 GMT -5 Skaggs said:

Time Warner Subs: Kiss Your HD Shows Goodbye!
Commentary By Swanni, link to story

Time Warner last week launched a marketing campaign called "Roll Over or Get Tough," in which it urges subscribers to vote on whether the cable operator should, well, "get tough" with networks who are asking for higher programming fees to carry their channels. (The subscribers can vote at a Time Warner web site, rolloverorgettough.com.)

[Skaggs]

While reading up on the Syracuse Basketball team at www.syracuse.com, I found this ad on the webiste:

[econ]

FACTS ABOUT FOX'S NEGOTIATIONS WITH TWC

Apparently one of the networks Time Warner is negotiating with is Fox.As it stands right now after Dec 31, if negotiations fail we will not be seeing Fox on Time Warner.Following is an argument Fox gives in their negotiations with Time Warner
Over Thanksgiving weekend, Time Warner Cable (TWC) unleashed an advertising blitz announcing its intention to “get tough” with programmers by refusing to pay fair value compensation for content. The campaign masquerades as a grassroots effort to enlist viewer participation. But unfortunately it is full of distortions. Here are the biggest Myths and Facts from this campaign.




Myth: If programmers weren’t asking for fair value compensation, consumers’ cable rates would be lower.

Fact: Cable companies have been raising rates on consumers for years. In good economic times, rates have gone up. In the recent recession, rates have still gone up. Even if Fox does not receive fair value compensation for its content cable bills will still go up. In fact, in some markets Time Warner Cable has announced 20% rate increases while simultaneously threatening to “get tough” with programmers.



Myth: TWC provides its customers broadcast network signals for free as part of their basic cable package, so it’s not right for TWC to have to pay for something it gives away.

Fact: TWC actually charges a significant fee for broadcast networks as part of their Basic Cable package. In fact, on TWC’s own pricing guide, “Broadcast” is broken out as a separate line item. TWC charges its subscribers as much as $36 per month for the 6 broadcast networks. Not one penny of that is being shared with Fox.



Myth: If cable companies like TWC pay fair value for the programming provided by broadcasters and other content providers, it will “force” them to raise cable fees for consumers.

Fact: TWC is a successful, profitable business (thanks in part to the money they make off of broadcasters’ content). It can surely afford to fairly compensate broadcasters for that content without raising rates. Just how profitable is TWC? TWC’s operating profit in 2008 exceeded $6 billion. TWC is on track to finish 2009 with nearly $2 billion in free cash flow – up 20 percent over the previous year. So far this year, TWC has generated more than $8 billion in subscription revenues from video alone and its programming costs represent only 22% of those revenues. In the past quarter alone, TWC generated monthly service revenues of $69 per month per video subscriber, while its average programming cost per subscriber was $26. That is a profit contribution of more than $43 per video sub per month. Overall, the company achieved an operating profit margin of 36% in its last reported quarter.



Myth: The compensation being sought by programmers like FOX is “exorbitant” and “unreasonable.”

Fact: The compensation being sought for the FOX stations is entirely reasonable. According to SNL Kagan, the equitable rate FOX is proposing for all its networks is in the same ballpark as what Time Warner pays for ONE cable network, ESPN. In fact, based on the comparable cost of our programming, the Fox stations could charge $4-5 per subscriber per month. FOX spends more than ESPN, which gets about $4 per subscriber per month. TNT gets $1 per subscriber, but spends about 80% less on programming than FOX. And if one looks at the ratings FOX and its stations get relative to cable networks, the value would actually be closer to $10 per subscriber. Moreover, FOX attracts more viewers than the five most expensive cable networks combined (ESPN, TNT, USA, ESPN2 and NFL Net). The bottom line is that the Fox stations feature some of the nation’s most-watched programming with shows such as 24, American Idol, House, Glee, and The Simpsons, as well as the most compelling sports on television with the National Football League, Major League Baseball, and NASCAR. The price being asked for as compensation for all this value is extremely reasonable.



Myth: Broadcasters like FOX are already receiving fair compensation for their programming.

Fact: The broadcast television business is suffering because broadcast networks are competing on an uneven playing field with cable networks. Cable networks have two streams of revenue: advertising and fees paid by distributors. Broadcasters like FOX have the single stream of advertising. This has allowed cable networks like ESPN to get a leg up to purchase the rights to content like Monday Night Football and The BCS Championship Series – which means that tens of millions of Americans who can’t afford or choose not to subscribe to cable miss this event programming. The future of free, over-the-air broadcast programming requires broadcasters to compete on a level playing field – which means getting fair value compensation from cable companies like Time Warner Cable.



Myth: Consumers want cable companies like Time Warner Cable to “get tough” with programmers.

Fact: Time Warner Cable has established a successful business by getting tough with programmers. What matters to consumers is uninterrupted access to the programming they love at reasonable prices. That is why Congress has consistently stood by the principle that carriage agreements between distributors and programmers should be negotiated directly between the two parties. Achieving a fair agreement will mean that TWC subscribers will not suffer a service disruption. And, as importantly, it will contribute to the long-term strength and stability of over-the-air broadcasting, which is of vital importance to tens of millions of American households.

[ebo]

Dec 21, 2009 9:57:05 GMT -5 econ said:

Myth: TWC provides its customers broadcast network signals for free as part of their basic cable package, so it’s not right for TWC to have to pay for something it gives away.

Fact: TWC actually charges a significant fee for broadcast networks as part of their Basic Cable package. In fact, on TWC’s own pricing guide, “Broadcast” is broken out as a separate line item. TWC charges its subscribers as much as $36 per month for the 6 broadcast networks. Not one penny of that is being shared with Fox.

$36? Where are they charging that? I'm paying $12.10 before taxes. They have to charge something to maintain the infrastructure to get a signal to me; that doesn't seem excessive. $36 sounds like Basic + Standard.

Just how profitable is TWC? TWC’s operating profit in 2008 exceeded $6 billion. TWC is on track to finish 2009 with nearly $2 billion in free cash flow – up 20 percent over the previous year. So far this year, TWC has generated more than $8 billion in subscription revenues from video alone and its programming costs represent only 22% of those revenues. In the past quarter alone, TWC generated monthly service revenues of $69 per month per video subscriber, while its average programming cost per subscriber was $26. That is a profit contribution of more than $43 per video sub per month. Overall, the company achieved an operating profit margin of 36% in its last reported quarter.

As long as we're in full disclosure mode, how about telling us how much Fox made in that period?

The compensation being sought for the FOX stations is entirely reasonable. According to SNL Kagan, the equitable rate FOX is proposing for all its networks is in the same ballpark as what Time Warner pays for ONE cable network, ESPN. In fact, based on the comparable cost of our programming, the Fox stations could charge $4-5 per subscriber per month. FOX spends more than ESPN, which gets about $4 per subscriber per month.

From which I conclude that Fox is seeking about $4 per subscriber per month. That's exorbitant.

Myth: Broadcasters like FOX are already receiving fair compensation for their programming.

Fact: The broadcast television business is suffering because broadcast networks are competing on an uneven playing field with cable networks. Cable networks have two streams of revenue: advertising and fees paid by distributors. Broadcasters like FOX have the single stream of advertising.

Cable network viewership is increasing but broadcast networks still have far more viewers most of the time (even if the viewers watch them on cable or satellite) and can charge more for ads.

Achieving a fair agreement will mean that TWC subscribers will not suffer a service disruption. And, as importantly, it will contribute to the long-term strength and stability of over-the-air broadcasting, which is of vital importance to tens of millions of American households.

And now Fox is saying that cable viewers should subsidize OTA viewers.

Here's the way it should work (but never will): Broadcast stations should be available without charge to cable (and satellite) companies, except for the cost of physically acquiring the signal. The station should foot that bill if it invokes "must carry," otherwise the cable company should. The cable company isn't stealing the signal any more than manufacturers of antennas, coax and TV sets are; they're just helping to deliver it and charging a fee for that service. If any negotiations are involved they should be entirely separate from negotiations for other products offered by the same network or station owner, such as non-broadcast channels.

[xzi]

Dec 21, 2009 14:53:20 GMT -5 ebo said:

Dec 21, 2009 9:57:05 GMT -5 econ said:

Myth: TWC provides its customers broadcast network signals for free as part of their basic cable package, so it’s not right for TWC to have to pay for something it gives away.

Fact: TWC actually charges a significant fee for broadcast networks as part of their Basic Cable package. In fact, on TWC’s own pricing guide, “Broadcast” is broken out as a separate line item. TWC charges its subscribers as much as $36 per month for the 6 broadcast networks. Not one penny of that is being shared with Fox.

$36? Where are they charging that? I'm paying $12.10 before taxes. They have to charge something to maintain the infrastructure to get a signal to me; that doesn't seem excessive. $36 sounds like Basic + Standard.

I think it clearly states "as much as" meaning not necessarily in all markets is that the case.

[hurnik]

I can tell you in CO, where my parents live, the LOWEST cable package they can get is $36/month plus taxes (they may have comcast though I'm not sure who their provider is). We were lucky for a while to have "basic" service for $6.95/month until TW doubled it (or thereabouts) a few years back.

[Skaggs]

I started a thread on the FOX-TWC dispute here.

The loss of the NFL's NFC playoffs would create a heck of a discussion. I'll contact the TU's Pete Dougherty.

[Skaggs]

Dec 22, 2009 10:06:15 GMT -5 Skaggs said:

The loss of the NFL's NFC playoffs would create a heck of a discussion. I'll contact the TU's Pete Dougherty.

Pete's off this week, returning Dec 28th.

[ebo]

Dec 21, 2009 17:27:35 GMT -5 hurnik said:

I can tell you in CO, where my parents live, the LOWEST cable package they can get is $36/month plus taxes (they may have comcast though I'm not sure who their provider is). We were lucky for a while to have "basic" service for $6.95/month until TW doubled it (or thereabouts) a few years back.

I stand corrected. From what I found in a quick Google search, it appears that cable companies must offer a basic tier that includes at least whatever local stations the company carries plus any government/educational/public access channels. It may include more channels at the company's discretion. That is the only tier with any rate regulation, and the rate is supposed to be consistent with what the company might charge if it had real competition. But that's open to interpretation by whatever body administers the franchise, and in any case the rule, like the pirates' rule of parlay, is more of a guideline. So I suppose a Basic tier could be similar to what TWC calls Basic + Standard or somewhere in between, on the grounds that if a competitor offered a similar package they would charge as much.

It's also possible that they offer a lower priced tier but don't tell new customers about it unless they ask.