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Why you shouldn’t just blame your cable company for that $200 bill

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Like the older sibling who seems to be blamed for everything, cable, satellite and telco TV providers caught scrutiny Tuesday after research firm the NPD Group released a report forecasting that the average multi-channel subscription bill will spiral to around $200 by the end of the decade.

Aren’t these guys smart enough to know that they’re forcing consumers to consider internet-based on-demand programming options? Well, they’re not necessarily driving the bus in terms of spiraling subscription costs, the program suppliers are.

According to a Nomura Equity Research report released Monday, fees paid by cable, satellite and telco distributors to program suppliers increased 8.2 percent last year to around $33.5 billion. And they’re  likely to increase around 8 percent for each of the next several years going forward, surpassing $39 billion by 2013.

Nomura reports that four media conglomerates account for 75 percent of this fee structure, with the Walt Disney Company controlling an industry-leading 24 percent of the pie. Notable: Disney distributes ESPN, which has far and away the highest carriage fees in the multi-channel business, taking an average of $4.69 from each U.S. multi-channel subscriber.

The other major stakeholders: Time Warner, which houses HBO, TNT, TBS and CNN, controls 21 percent of affiliate fees; Comcast, owner of Bravo and the USA Network, accounts for 16 percent; and News Corp., owner Fox News, saps up 14 percent of fees. (Notable, of course: Comcast also runs the country’s biggest cable oeprators, touting more than 22 million subscribers.)

And it’s not just carriage fees for cable networks that are spiraling upward. Nomura reports that re-transmission fees paid to broadcast network affiliate stations totaled nearly $400 million in 2011 and should reach $750 million this year.

2 Responses to “Why you shouldn’t just blame your cable company for that $200 bill”

  1. Kate Schackai

    Come now, Jojo — I enjoyed Stacey’s story on this yesterday, but Daniel raises a point that’s worth talking about.

    As consumers, we all want stuff to get less expensive, but we also want it to get faster, cooler, and more diverse. Whether we’re talking about media content, devices, or connectivity, there’s a genuine sense that we’re being swindled somehow — personally, I tend to think that’s true, but at the same time, if we want to consume these things, someone somewhere is going to have to make enough money on the transaction to make providing the product or service worthwhile.

    I’m a terrible example. I refuse to pay for cable TV, so I’ve never had it. But I have cable broadband and Netflix — and I’m pretty skeptical that that $8/month per subscriber for content would be enough to support the production of Mad Men, Battlestar Galactica, Avatar, and every other show we watch. If I had to pay per show streamed, you can bet I’d turn the TV off or put in an old DVD.

    I was going to say that you can’t get something for nothing, but maybe the problem is that with TV, you used to. Analog was free. (Hell, it was almost a right.) And content streaming has resurrected the expectation of video content that’s free-to-inexpensive. Maybe paid cable content is the anomaly and we’ll get back to fully ad-supported TV some point.