Many of the distributors have complained about the high wholesale price of sports networks, arguing that only a small number of viewers actually want the programming. Now, the distributors are getting squeezed by broadcast networks for higher retransmission fees. Can they use the same song-and-dance? Nope.
Reports suggest that CBS wants close to $2 a subscriber per month from Time Warner Cable, and probably from other multichannel video program distributors. This would be less than half the price of ESPN, which is getting just north of $5, but double what’s paid for TBS, USA and other high-cable rated networks, which get to around $1.
Steve Burke, president/chief executive officer of NBCUniversal also wants to close the gap for NBC.
All this could mean further problems for distributors down the line in terms of programming costs. Will they be squeezed to give up some of their business to cheaper over-the-top services? Or will more viewership will go to the likes of Netflix or Amazon Prime?
Multichannel video program distributors have been weary of the possible loss of more cord-shaving, cost-costing customers, with many instituting lower-cost TV options. Comcast has one for $10 a month; Cox last month started one for around $40. Will that cannibalize things?
Where does all this lead? When network blackouts occur, consumers can complain specifically about the brands they miss, such as the NFL, “Modern Family,” “The Voice” or “American Idol.” They don’t complain about missing Time Warner, DirecTV, or Comcast.
In this regard, many analysts believe multichannel video program distributors will always lose the public relations war. After a while, you wonder what new tact they can take -- even as they continue to drip video subscribers, which is somewhat compensated by continued growth in broadband and voice business (for cable operators, anyway).
While negotiating with CBS, one Time Warner executive mused that consumers could consider temporarily taking on the renegade Internet-delivered service Aereo for their CBS fix.
Fight or flight? Controlling the broadband or other media pipes might lead some to find another business model -- or another point of attack.