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RSSNow, after decades of head-scratching cable programming deals, Hallmark Channel wants federal regulators to have a look. Hallmark, somewhat surprisingly a top five rated network among all cable networks in prime time, says it only garners some 3 cents a subscriber from cable operators.
That is too low compared to other networks like CNN, Court TV, Golf Channel and E! Entertainment Television, all of which pull in much better affiliate fees, but don't bring home as many viewers as Hallmark. Hallmark's prime-time slate is mostly family-oriented programming.
Henry Schleiff, president and CEO of Hallmark parent Crown Media Holdings, thinks the Federal Communications Commission might like to do something about this -- perhaps add some new regulations to the already federally mangled rule world of cable TV.
The problem is this: Hallmark is an independent network, and as such can't command better deals than other multi-network, bigger media companies, can get. The Oxygen cable network was in Hallmark's league -- the league of independent cable networks. But yesterday Oxygen breathed a little easier with the announcement of its purchase by NBC.
In the best of all possible worlds, Hallmark would love to have the same fate -- to be sold to the likes of a CBS, a network which, like Hallmark, still has lot of older viewers. CBS would like to grow its cable holdings. Is Hallmark the right fit? CBS executives might say they'd rather get some slightly younger viewers.
With the coming of new cable affiliate negotiations, Schleiff realizes new deals with substantially higher increases will be hard to come by. Thus, the visit to the FCC.
Does the higher-rated show deserve the higher price? That's the rule when it comes to advertisers, generally speaking. But the cable industry has a different set of criteria, which come from its longtime established roots as a local cable programming monopoly.
Sure there may be satellite and broadband now, but old habits are tough to break. Pricing leverage among cable network operators has everything to do with the number of cable channels -- as well as more valuable broadcast stations -- you have. It's not necessarily whether they are any good.
There is nothing wrong with big media companies. But capitalism only seems to live on one end of the cable business.
Hallmark should do more work to convince the FCC.
If, in fact, Hallmark has been convincing low-ball packaged good advertisers to spend more money on the network -- those sponsors typically are attracted to programs skewing toward older viewers -- this might be helpful in convincing the FCC that the other side of the cable financial equation, that of affiliate fees, should also work at more market-like appropriate rates.
And if not, the FCC should fine cable operators. It could rule that a family of networks should not be the only ones with an advantage, that a family programming network should have a shot.
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I don't want my government anywhere near regulating or otherwise influencing cable affiliate fees. Are you kidding? I hope Wayne was joking when he brought up the idea of FCC fines for affiliate rates that weren't "market-like". There is a market and so far it says Hallmark is worth 3 cents.
There is no formula to equate ratings with affiliate fees. Fees are set by leverage and network value. I'll allow that the leverage is hugely one-sided in favor of MSOs, especially in the case of indy networks. But that's life in the big city. I would rather live with that than the can of worms that will open if an over-stepping FCC starts to meddle in content and compensation.
Leverage is only one of the inputs in setting network fees, though. There is also network value. Hallmark is a spectacular brand. The network has nice ratings. It has good programming. But it's not as uniquely differentiated as E! or Court. Just my opinion, and I'm sure my friends at Hallmark would disagree (and I DO have friends at Hallmark), but absent the network bug, if I walked into a room in which Hallmark was playing, it would take me some time to figure out what channel was on. If I were to walk into a room where Golf Channel was playing it would take me about 3 seconds.
I bet Court TV was getting better than 3 cents/sub before they sold to Turner and left the ranks of the independent. I'm sure Oxygen does better than 3 cents/sub. I agree that cable carriage negotiations are hugely one-sided and stacked against cable networks--particularly indies. However, this is America. You want better rates, do a better job of negotiating. Leave the massively inefficient government bureaucrats out of it.
That's just life on Madison Avenue and the 22 year olds who push a button on the computer and execute millions of dollars of buys. I agree, but let's face the facts. This is not going to change overnight, although you would think it would, given that the boomers are the pig in the python, the large demographic gulp.
For everything you wrote above, I can tell you countless stories about other boomers who say they are down sizing and have trimmed their expenditures. But they are also clipping coupons at the CVS.
They might be buying the occasional sailboat, or trip to an exotic local, but they don't populate the malls weekly buying into the latest fashion frenzy. That's the real rub. They already have it all, except for the occasional yacht.
Marianne Paskowski
Marianne Paskowski
Did you just write an opinion stating that you think the FCC should control cable network access and pricing? By fining the cable operator? That's not going to help the Hallmark Channel but it sure would the Donkey and or the Elephant channel. The FCC can't set prices, that's un-American.
Marianne Paskowski