Big Four: Retrans Costs Ops 85 Cents per Month
Study: Fees Represent Less than 2% of Average Bill
By Ted Hearn -- Multichannel News, 7/19/2007 5:33:00 PM
The four major broadcast networks submitted a consultant study to the Federal Communications Commission concluding that cable-operator payments to local TV stations were too small to take the blame for driving up retail cable rates.
The study claimed that Comcast, Time Warner Cable and two other major MSOs each paid on average about 85 cents per month in fees to local TV stations -- an amount representing less than 2% of an average monthly consumer bill of $58.49.
Moreover, the network-funded study argued that the four cable operators spent about one-third of their total video-programming revenue to acquire programming from broadcast and nonbroadcast sources, proving that programming costs weren’t necessarily squeezing margins.
“When you do the math, that leaves more than two-thirds of the amount cable subscribers pay for programming on a monthly basis to go toward either to cable operators’ nonprogramming costs or for cable operators’ profit,” the slender, nine-page study said.
ABC, CBS, Fox and NBC said the point of the study was to counter arguments made earlier in the year to the FCC by an ad hoc cable coalition about the impact on cable rates that fees to local stations were having.
“Some broadcasters are becoming more insistent upon obtaining excessive direct cash payments from cable operators at levels that could foster significant rate increases,” said the Coalition for Retransmission Consent Reform, which includes Bright House Networks, Insight Communications, Suddenlink Communications, Oxygen Media and Hallmark Channel.
The Big Four derived its cable-cost and revenue data from government studies and cable rate cards of Comcast, Time Warner, Charter Communications and Cablevision Systems. The study said cable payments to local TV stations were just too small to have a major impact on cable’s rate structure.
“The point of this paper is not to argue that cable rates are too high, but to simply rebut the [CRCR’s] assertion that program costs, particularly retransmission-consent-related program costs, are driving up cable rates charged to consumers,” the study said.
The Big Four also said cable TV is “bargain for consumers, particularly when compared with the cost of almost every other form of entertainment.”
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