Adelphia Communications Corp. has become the largest MSO to
join the National Cable Television Cooperative -- a purchasing group that will hold a
special meeting Jan. 19 to explore additional ways to cut better deals with programmers --
officials said last week.
The addition of Adelphia -- which owns or manages systems
with about 2.3 million subscribers -- to its roster will bring the NCTC's membership
to operators with more than 12 million homes, according to co-op president Michael
"We're glad to have [Adelphia]," Pandzik
said. "We continue to add members big and small."
Many of the NCTC's member companies are small and
midsized MSOs, and several of those are independents. Among its biggest members are Jones
Intercable Inc. (which is being acquired by Comcast Corp.), Cable One, Century
Communications Corp. and FrontierVision Partners L.P.
Operators join the co-op in order to get better deals and
to cut their costs for both programming services and hardware. The NCTC, by pooling the
subscribers of its members, is able to negotiate discounts on contracts the way that huge
MSOs such as Tele-Communications Inc. and Time Warner Cable do.
The co-op's volume discounts may not be as large as
those that TCI might get, but they are much better than what a small operator can get on
Jeff Abbas, Adelphia's vice president of programming,
said that while the co-op has programming deals with more than 50 cable networks, his MSO
will probably participate in only a few, where it makes sense.
In general, Adelphia can often negotiate better programming
deals than the NCTC can, because the MSO can guarantee networks a set number of
subscribers, Abbas said.
"But there are a handful of services where [the
NCTC's] volume allows them to obtain more competitive license fees," he added.
In the past, as Abbas noted, unlike a single MSO, the NCTC
has not been able to guarantee specific numbers of subscribers to networks as part of
carriage deals, which limits the attractiveness of the deals that it can negotiate for its
But Pandzik said the co-op has formed a programming
advisory group, made up of representatives of its 25 largest MSO members, to discuss that
issue. The idea is to possibly figure out a way that the NCTC, through the backing of its
members, could commit to specific numbers of subscribers as part of contracts with
programmers, like single MSOs do.
"If you can tell a programmer, 'If we give you X
number of subscribers, what will we get in launch support, ad avails, etc.?' that
would put us on a top place in negotiations," Pandzik said.
The programming advisory group is meeting Jan. 19, possibly
carrying over to the next day, at the NCTC's headquarters in Lenexa, Kan., and in
nearby Overland Park, Kan.
Both Abbas and Pandzik said there are certain programmers
with license fees that are strictly based on the volume of subscribers that an operator
can offer, and Adelphia can now benefit from the volume that the NCTC brings to the table
with its members.
One source said a few networks set a base of 5 million
homes -- more than double what Adelphia has -- before they give operators discounts on
license fees. And with programming costs being such a hot button, any break that an MSO
can get on license fees is important.
"Even a few pennies or fractions of pennies over
several million subscribers over 12 months add up," Pandzik said.
The co-op now has 135 of the top 200 MSOs as members, and
53 of the top 100 MSOs.
The NCTC still has a lawsuit pending that it filed last
year, against MTV Networks, in a dispute over license fees.