Wednesday, December 19, 2012

Time Warner Cable - Penny Wise, Pound Foolish

At first blush, Time Warner Cable (TWC) appears to be acting as a protector of the consumer, dropping cable networks to keep the costs of service down and thus the cost of monthly cable service for consumers. By dropping networks they believe lack enough interest, the back end of the long tail of programming content, only the most popular is viewed and so should be paid for.  And so, in TWC's mind those unfortunate networks include Ovation, and others,"including Current TV, Hallmark Movie Channel, IFC and WE tv—whose carriage agreements are 'due to expire soon' and which could be dropped 'in the near future.'"

But for the most part, these "low rated" channels are also the lowest cost channels.  Their fee structure is less than a number of the bigger channels including USA, ESPN, and Fox News.  Of course, each of these channels are part of a media empire also owned by broadcasters, NBC, ABC, and FOX, respectively.  Their fees, and their sister networks, are not only higher, but most likely their annual license fee increases are growing faster than our current annual inflation rate.  So any drop of penny services by Time Warner won't protect consumers from the price increases of other services.  Time Warner Cable consumer bills, like other cable operators, will still continue to climb.

At the same time, TWC has invested in a regional sports network, demanding huge license fees by cable operators for carriage of their new network.  It is more than a question about sports verse the arts, it is a question about how to best manage a cable operator business that is getting more and more expensive to operate.  Dropping smaller, less viewed channels like Ovation may appear to be a solution, but it is like plugging a whole in the dam with your finger; it will not fix the bigger problem.

1 comment:

  1. Good article! Have you signed the petition yet?