Here we go again: Time Warner Cable has resurrected its “Roll Over or Get Tough” marketing campaign, this time in preparation for an upcoming carriage fight with Disney and ABC.
“Roll Over or Get Tough” was first launched last winter, in the midst of Time Warner Cable’s retransmission standoff with Fox. But the marketing campaign, which is designed to educate consumers about where their cable dollars go (and perhaps to elicit sympathy from subscribers over Time Warner Cable’s “meager” profit margins), was re-launched before the MSO enters a new round of negotiations with Disney.
Most carriage agreement negotiations go down to the wire before cable companies and distributors launch campaigns to stir public support for their position, but Time Warner Cable is trying to appeal to the public early. It has until September 1 in its negotiations to keep ESPN, some ABC stations and other Disney cable networks on its cable systems. The early start to its public campaign suggests this negotiations process could get particularly messy.
According to the website, 40 percent of Time Warner Cable’s revenue goes to programmers for the ability to distribute their networks to its subscribers. But those programmers are increasingly asking for more money for the rights to carry their channels, sometimes demanding a 300 percent increase for those rights.
When all is said and done, Time Warner Cable earned a profit for its shareholders of about $0.06 for every dollar that we brought in during 2009. (That’s slightly below the average of 7% for the past 10 years among US companies in the S&P 500, according to the Wall Street Journal.)
That might not sound like a lot, but the truth is that Time Warner Cable reported $3.3 billion in net income last year, while its subscription revenue increased 5 percent to $17.2 billion. And it’s not like Time Warner Cable will suffer from those increased programming fees itself, since in most cases, cable companies pass the programming rate increases on to their customers.
In addition to relaunching RollOverorGetTough, Time Warner Cable also helped establish the American Television Alliance (ATVA), a coalition of cable distributors, programmers, and public interest groups that Time Warner Cable says was formed to “ensure television viewers are no longer treated as bargaining chips by broadcasters when they come to the table to renew their carriage deals.” ATVA members include distributors like AT&T, Cablevision, DirecTV, Dish Network and Verizon, trade groups such as American Cable Association, public interest and consumer groups like New America Foundation and Public Knowledge, and independent programmers such as The Africa Channel, Si! TV and Discovery Channel.
Related content on GigaOM Pro: ESPN Leads the Way Over the Top, But Will Others Follow? (subscription required)