Scrambled

04.12.14

Why Your Cable Bill Keeps Going Up

When networks ask carriers for too much money, they get blocked from your screen—until you’re forced to pay more money to get them back.

So you are a cable TV subscriber in Los Angeles and want to see the Dodgers on TV? Good luck, Time Warner and local cable and satellite carriers are fighting over money, your money, and have not come up with a solution to make Dodgers games available. There are people scattered throughout the country right now who cannot get the Cartoon Network. Why? Another battle over subscribers’ money.

The television networks and the television carriers, whether it’s through cable, satellite or phone lines, carriers seeming are always fighting these days over the cost of programming and what rights’ fees should be. The rights’ fee is what a television carrier pays for a networks programming. The carrier then passes that cost along to consumers and tacks on an additional fee because they too feel the need to be compensated for bringing the program into a home.

The injured party is the subscribers who have little course to affect the talks unless they decide to drop their provider for another, and there is no guarantee switching to another provider will end TV blackouts.

There probably are a few executives at The Weather Channel who are breathing a sigh of relief now that The Weather Channel and DirecTV have resolved their differences and The Weather Channel is back on the satellite provider for the first time since January 14. That’s the way it is in disputes between cable or satellite or telephone providers and television networks. When an agreement is struck, there is always a mea culpa from one or both of the parties, and life goes on with the television network getting a rights fee hike, which is passed onto the subscriber or the innocent bystander.

It is the consumer who has to pick up the increase and it’s reflected in higher rates on the cable TV, satellite or phone company’s bill. Thanks to the 1984 Cable TV Act, cable subscribers have really no say in what they want for their needs. The cable carrier was allowed to establish tiers of services. The consumer could take a local, basic tier alone or basic and basic extended but would have no choice in what they wanted to buy and were forced to take whatever the multiple system operative wants to give them or they opt out of having cable TV. The same apparently holds true for satellite TV and the phone companies.

A week ago Tuesday, Cable One dropped BET, Centric, CMT, Comedy Central, MTV, MTV2, MTV Hits, Nickelodeon, Nick Jr., Nick Teen, Nick Toons, Spike, TV Land, VH-1 and VH-1 Classic from its systems in more than a dozen states in a fight with Viacom over rights fees.

Cable One dropped eight Time Warner Turner channels including TNT, CNN, TBS, Cartoon Network and Turner Classic Movies last fall for about a month. The reason? Rights fees.

“Most cable companies can absorb around $2 per subscriber.”

Meanwhile the biggest story in Major League Baseball isn’t Derek Jeter’s farewell tour. The entire sports, entertainment and cable/satellite TV industry is watching to see what happens in the Los Angeles area and whether or not Time Warner can succeed in getting the new Dodgers sports network onto local cable systems and satellite services. So far, it has been a rocky start up for the fledgling network with a great many carriers balking at the fees that Time Warner wants. It is estimated that about 70 percent of Dodgers fans have access to the team’s televised contests at the moment.

The fans also have no say in what they want to receive from their local cable and satellite companies in this dust up.

Jim Williams, who has been on both sides on the table in negotiating deals explains that it is simply two sides fighting over other people’s money.

“How this works is from a regional sports network’s view: We have content, we know that the fans want the content. What is the price point that we can offer our programming at that cable companies will be able to pass it on to the customers at without getting push back?” Williams explained. “Most cable companies can absorb around $2 per subscriber—but they must weigh the passing the cost along to the subscribers vs. how many people will I lose if the Dodgers strike a deal with say DirecTV.”

The big boys aren’t consulting their paying customers asking them whether they want these channels or not. It is just a way of doing business.

Last summer, Congresswoman Anna Eshoo introduced the Video Choice Act, which was designed to block blackouts during retransmission disputes. The California Democrat said through summer 2013 that there have been 70 contract spats since 2005 with 392 stations taken off systems around the country for 3,853 days. The Congresswoman’s bill has gone nowhere.

Congress can force cable, satellite TV and Telco’s along with networks to play nice with consumers if the representatives feel a public deluge raining upon them as happened in 2007.  

On December 29, 2007, the Patriots-Giants game became a political football. The game was scheduled to be carried by the NFL Network. At that time, the channel reached only 43 million cable and satellite homes—out of a possible 95 million American homes. Senator John Kerry of Massachusetts first suggested that the December game (featuring the then-undefeated Patriots) be moved to NBC, possibly as a Sunday night presentation. But the NFL wanted to keep the game on the NFL Network to give the league some leverage in its ongoing talks with cable operators.

Kerry, along with senators Arlen Specter and Patrick Leahy wrote a letter to NFL Commissioner Roger Goodell, in which they threatened to reconsider the limited antitrust exemption that the NFL enjoys (although none of senators was specific as to what the Senate could really do). Following that pressure, the game was shown on CBS and NBC—as well as on the NFL Network. 

That game was available to every football fan in America but more than seven years later the NFL Network is still struggling to get onto cable TV systems. The cable operators think the NFL is too pricey for them and have not been keen to do a deal. Of course some of that might be payback. The NFL has an exclusive deal with DirecTV for the league’s Sunday out of town package and cut out the cable TV operators.  

It’s all about other people’s money and the other people have no say on what they can get on their television screens.