Asked at a Senate hearing Tuesday why consumers aren’t given more information about how their cable bill is calculated, Time Warner Cable executive Melinda Witmer suggested there is confusion about how a cable operator functions, which could lead to misguided conclusions.
Saying he understood high programming carriage fees, Sen. Mark Pryor (D- Ark.) had asked Witmer why consumers don’t get “more transparency” that allows them “to know if we’re being charged fairly.”
“We understand their desire for transparency,” said Witmer, the chief video and content officer at Time Warner Cable (TWC). “What we find from our consumers is they don’t well understand the system through which they buy television and they receive content. We still find many consumers don’t necessarily understand, first of all, that cable operators don’t program the networks that they receive, and they don’t necessarily understand that we actually pay for and negotiate for licenses to carry all of that programming.”
“More transparency might help them,” Witmer added. “At the end of the day, though, for the consumer that wants to watch a single program, their perception of value may be very different from one network to the next, and that transparency is not always an immediate translation for them.”
Witmer indicated the “skyrocketing programming costs” operators like TWC face are leading to increased bills. She said TWC spends nearly 60% of its programming costs each year -- $2 billion-plus -- on paying to carry local stations.
WOW! CEO Colleen Abdoulah said operators aren’t allowed to share what they pay for individual networks and stations because contracts with programmers prohibit it. So even if operators wanted to provide information on how much they pay to carry ESPN, TNT and the local NBC station, which might allow a customer to determine the mark-up they in turn pay, an operator cannot provide disclosure.
Sen. Pryor said he doesn’t like those restrictions.
“Right on,” she agreed.
The prospect of a la carte cable packages was a backdrop during the hearing. Abdoulah said operators are limited in choices they can make about how their programming is offered by agreements with networks and media companies. She said she would like to “offer a sports tier, so that 50% of our viewers who don’t watch sports aren’t subsidizing these enormous sports costs.”
“I don’t have that right,” she added. “The programmers, the broadcasters tell us and mandate and the laws help them do this … how we carry (them).”
Witmer said cable operators struggle with rules requiring them to carry broadcast stations “as a point of entry to purchasing anything else from us.”
“That is unlike any other platform,” she said. “Satellite providers are not required to sell the broadcast stations.”
Even as the current landscape can lead to blackouts, CBS Executive Vice President Martin Franks appealed to the Senate committee not to alter the laws that allow for station owners to collect restransmission consent payments.
He said CBS has cut hordes of deals with no blackouts for its stations reaching millions of homes. CBS invests $5.5 billion a year in content, and the current laws allow it to plan ways to recoup some of that.
He said the current system is not ideal, but “I guess we prefer the devil we know.”