Art of the Deal
Witmer’s Take On Programming
by K.C. Neel -- Multichannel News, 9/28/2008 8:00:00 PM
“If you don’t like being bored, this is a great business to be in,” said Melinda Witmer, who took the reins as Time Warner Cable’s senior vice president and chief programming officer late last year.
“We are constantly talking to our programming partners to make sure we have the best lineup possible,” she said. “We’re in a constant state of negotiations. The days of cutting a programming deal and then waiting five years to talk about renewals are long gone.”
To be sure, relationships between cable operators and programmers has always been a bit complex and, at times, even contentious. But as the industry continues to morph and new delivery pipelines are developed, Witmer says it’s imperative operators and programmers keep open lines of communications.
Witmer certainly practices what she preaches, according to ESPN executive vice president of sales and marketing Sean Bratches, who considers Witmer and her team tough but fair.
“We have a great relationship with Melinda and her team,” Bratches said. “She is always seeking a creative solution to getting a deal done.”
Those skills will come in handy in the coming months as retransmission-consent contracts expire. Witmer said this year’s cycle is not unlike other years where retransmission-consent deals must be redrafted. She declined to say what broadcasters are demanding this time around but noted that she understands the pressure they are under right now.
“Many broadcasters are getting picked up by investors, who have different parameters for what financial success means,” she said. “At the same time, advertising is declining and network arrangements are changing. Rather than getting paid by the networks to carry their programming, the broadcasters are being asked to pay the networks for that carriage.”
Some analysts predict Time Warner Cable could take a bruising in retrans negotiations, particularly with Spanish-language network Univision.
Pali Research media analyst Richard Greenfield urged investors recently to sell Time Warner Cable stock in anticipation of a long, drawn-out retrans battle with Univision. He warned that the MSO is particularly vulnerable because it’s the dominant cable provider in Los Angeles and New York, the two largest Hispanic markets in the country. The company also is the dominant provider in Dallas, San Antonio and Austin, Texas, all of which have substantial Hispanic populations.
But Witmer remains confident that TWC will successfully cut a deal that benefits both sides.
“We have had a deal with Univision for years and not a must-carry deal like many other operators have had,” Witmer said. “We are confident we can come to terms that will work for both sides.”
Then there is CBS, which is poised to begin retrans talks with Time Warner Cable soon. The current deal expires next year. CBS CEO Les Moonves, a vocal proponent of cash for carriage, hinted during recent analyst meetings that he could demand as much as 50 cents per subscriber per month.
“Broadcasters have come under a financial squeeze, so what they’re asking for is not surprising,” Witmer said. “Retransmission-consent negotiations have always been difficult, but the broadcasters are under intense pressure this time around and it creates a more aggressive environment. But we are both local businesses and that gives us an opportunity to work together. I am big believer in local programming and it’s in our best interest to target and serve our customers. I am sure there are some areas where local broadcasters and Time Warner Cable can work together. Some broadcasters have already been receptive to such ideas.”
Meanwhile, talks with satellite-delivered networks also continue. Video on demand has dominated some negotiations. Witmer said VOD conversations tend to be easy. “Over the last year, we have gone out and talked at length about our vision for on demand,” Witmer said. “We believe in marrying on demand with linear programming. I recognize consumers want to go to the Internet to view additional content or watch programming they missed. But we also believe they want to watch TV in the living room.”
Most of the MSO’s on-demand programming remains free to customers. To do that long term, however, means the VOD product will need to carry an advertising load comparable to the linear channels, she said.
Witmer is somewhat vexed about some programmers’ focus of putting content already available on TV on the Web as well. “When we see content go to the Internet and it’s free, we have to ask whether it makes sense to pay the same rate for it,” she said.
While Time Warner Cable may not drop a channel because a programmer wants to continue offering free or low-cost content on the Internet, she said it will likely have to prove its value. “Everyone has to prove their relevancy,” she said.
(Time Warner Cable is getting ready to launch its own online Road Runner Video Store, which will rent or sell more than 3,000 TV shows and movies.)
Another hot issue on Witmer’s agenda has been sports rights and fees. Time Warner Cable recently cut a deal with the Big Ten Network, agreeing to carry the network on its basic lineup in Big Ten markets. In out-of-market areas, the network will likely show up on a tier.
“When it comes to sports, the fans are very passionate and usually very vocal,” Witmer said. “So sports network carriage and fees are always going to garner attention. We worked hard to strike a balance with the Big 10 Network. I think we satisfied avid fans.”
Talks with The NFL Network haven’t gone so well. The National Football League has made several proposals, Witmer said. However, the two sides have yet to come to terms. “We haven’t had significant demand for the NFL Network,” she said. “And that has been a significant factor in our valuations of the network.”
Witmer doesn’t see the day when Time Warner Cable starts buying up networks in any meaningful way. But she does see potential for local programming opportunities, particularly for on-demand content.
“So far, we haven’t exploited that, but I hope we do eventually. We have offered local programming for years. Some has been sophisticated but most of it has been modest. All of it has been interesting.”
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