Monday, January 4, 2010

Cable wars

The New York Times had a front page story today which was an easy-to-understand overview of what is going on in the cable industry with an explanation of the latest skirmish between News Corporation and Time Warner Cable.

What was most interesting was the varying costs for various cable programs, i.e., what they cost the distributors and then how that cost gets passed along to us--the consumers. For example, The Food Network costs distributors eight cents a viewer, on average, but the program owner (Scripps) wants an appreciably higher amount given the television ratings of this network compared to other channels.

What cable channel fetchs the highest rate? Not surprisingly, it's ESPN at $4.10 per viewer, on average. What may be a bit surprising is that second place--TNT--isn't even close. TNT gets 96 cents per viewer, less than a quarter of that received by its rival.

What will happen as prices rise? Consumers will look more and more to alternate forms of content delivery. A Time Warner spokesperson said that the power ultimately will rest with the consumer. Maybe...but we consumers must be willing to seek out other options for getting our content (Hulu, YouTube, iTunes) knowing that those who supply our broadband are typically the same companies who supply our cable programming.

Stay tuned--this battle is only beginning to heat up as we enter a new decade.

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