Update 2: As predicted, just a game of chicken and TWC and Viacom have settled their dispute.
Update 1: commenter “Mikey” provided us with some data in the comments and I’ve cleaned up the formatting and posted here. It is an analysis of the subscriber monthly cost per cable channel per tenth of a ratings point. Based on this data, Mikey gives the moral high ground in the dispute to Viacom (though he isn’t advocating all the spin Viacom has surrounded its PR campaign with). There were some fairly big “wow” moments for me when I saw the cost of high performing networks ratings-wise like Nick and USA vs. say, TNT).
[original post from 12/30/08 below]
Doubtful.
I’d probably ignore this and it would have merely been a reply to a comment left about Nikki Finke’s post on the TWC vs. Viacom battle. But the comment was posted in the broadcast weekly top twenty, and replying there seemed awkward since it doesn’t have a freaking thing to do with cable channels.
Viacom is asking Time Warner to pony up an additional $.25 per month, per subscriber. Time Warner’s response so far is this: we’ll pass on you and your cable channels. So Viacom is working the press, spinning tales about how 20% of TV viewing time is spent watching their channels so the increase is very reasonable.
While I understand Ms. Finke’s dismay at potentially losing SpongeBob, my gut tells me that Viacom and TWC are different sides of exactly the same greedy coin. There’s so much spin in the blurb she posted from TWC, that sorting through how misleading it is isn’t worth the effort since conflict will likely be avoided.
Viacom is hurting in general, and this isn’t a deal where it’s looking to get paid, it’s looking to get paid $.25/mo./subscriber more than it’s already receiving from TWC. I do not in any way immediately jump to the conclusion that Viacom deserves a $.25/month increase across all subscribers, and Time Warner is armed with data about how much time its customers spend watching Viacom channels.
I seriously doubt Viacom will give up all the revenues it receives from TWC in the name of earning an additional few million or so a month, but I also seriously doubt that TWC can handle the customer service hit. You can’t go dark on Nickelodeon, Comedy Central and MTV, etc. without running into a customer service nightmare.
Right now it seems like just an interesting game of chicken heading into the New Year, and the stuff Nikki Finke posted is pure Viacom propoganda in hopes of gaining some negotiating leverage. My bet is one of them, probably Viacom, blinks before the networks go dark on TWC. Can Viacom afford to lose the TWC subscriber base? Hell no. It would be looking at all kinds of make goods if that happened.
Can TWC really take on the customer service nightmare and lost local ad revenues for those channels? Not paying any fees at all would more than make up for the local ad revenue, but at the expense of screaming customers, and increased defection to satellite, and where available, FiOS. Though TWC seems in a better position than Viacom, TWC is clearly not going to be able to reprise Michael Corleone in The Godfather, part II and take a position like:
Viacom, you can have our answer now if you like. Our final offer is this: nothing. Not even the monthly fees we we’re already paying you…
…but it’s fun to think about.
This is a different issue…but we lost our CBS and Fox channels here in our market through Dish Network. It is kind of the same story; the local channels (owned by Fisher or something like that) wanted, according to Dish Network, an increase in fees of 80%. Dish Network said heck no.
So, now we don’t have either station and we get a $1.00 credit on our bill plus the Hallmark Movie Channel for free!
Luckily, for our household, Survivor and Amazing Race aren’t on right now. That is all we watch on CBS anyway.
If the greedy execs took a cut in their obscene pay, gave up their undeserved bonuses, restricted their perks to no more than their employees have, they wouldn’t have to worry about their advertising revenue gone soft and their profit margin would be consistent and they wouldn’t be in this mess.
Survivor and The Amazing Race are, in fact, the only shows worth watching at all, except the daily news I guess.
“Survivor and The Amazing Race are, in fact, the only shows worth watching at all, except the daily news I guess.”
No way, “Always Sunny in Philidelphia” is pretty much the greatest show ever created
Drop Viacom and don’t raise my rates. I won’t miss any of the channels in question and am disgusted by Viacom’s attempt to profit on the backs of cable/satellite subscribers. As reported in Reuters and AP, their ad revenues and ratings are dropping in part due to the fact that they make their most popular shows available for download on the internet.
So Viacom wants cable ad revenue, internet ad revenue, and wants increase fees that will be passed on to me? H*** no.
If a cable/satellite subscriber wants a Viacom channel so much, they can pay for it as an add on. Don’t pass the buck to every single subscriber.
I have a friend who used to work customer service for DirecTV. Last time Dish Network dumped a bunch of local channels, DirecTV offered a pretty sweet deal to former Dish subscribers and they got a lot of them. TWC probably doesn’t want to have to deal with that.
I have to disagree with you Robert on this one. Although I agree both sides will figure it out before the New Year, Viacom is in the stronger negotiating position here. Viacom’s lost revenue would be temporary while TWC’s lost revenue would be permanent. Cable is steadily losing customers to alternate services. This would cause a mass exodus from their customer base (and since their customers don’t just purchase Viacom channels ala carte the financial hit would be exponentially greater than what would be felt by Viacom). Also, you have to recognize the fact that the consumers who watch Viacom’s channels will find a service that provides those channels, Viacom will get its audience back (even if it takes a ratings hit for several weeks while the customer adjusts). However, once TWC loses customers to another service they are not likely to return… ever. So, even if TWC later works out a deal with Viacom the damage would have already been done. So, as the deadline approaches it is more important for TWC to ensure those channels don’t go dark because the effect would be permanent. (And dont think DirectTV and other TWC competitors in those areas arent planning a marketing campaign to take advantage of the situation).
twc dont lose these channels there decent and some r okay
what ever happen to constummers first
we desevre better than what were geting
were forced to pay more for less yeah right
twc fix or im gone hello direc tv
I personally hope they do drop the Viacom channels. As a mother to 3 small children at first I was really upset at the thought of losing Nickelodeon and Noggin, but now that I have thought about it wouldn’t be no great loss. There is better quality programming for my kids on other channels. And MTV and VH1 have just become worthless over the last couple of years.
You couldn’t pay me to go to satellite. Every time we have had it, it’s been a horrible disaster with the worst customer service on the planet.
And I think it’s hillarious that Viacom is painting themselves as poor little victims of big bad Time Warner in their press release about all this. Talking about how Time Warner needs to think about their customers, etc. Well, why can’t Viacom think about their customers as well.
I would dump cable TV tomorrow and switch to free over-the-air transmission except for one thing: the Noggin channel. However, if I find a way to get my kid her favorite shows some other way, the pay TV services will lose me forever. I wonder if I can buy the complete Blues Clues…
Blues Clues? You know I always wonder why parents sit and watch kids shows with their children. Just get them addicted to family guy – ‘And boom goes the dynamite!’ They have absolutely no idea why they are laughing.
But I truely sympathize wit you Jasbrit, I know what it is like to be stuck at home with a bunch of pre-teens – can’t imagine what the outcome would have been without the spongebob marathon – most likely the day would have ended up with me in a coffin.
Ohh Looky! The fun has just started for TWC – viacom is televising round the clock message on Nickelodeon, trying to frighten the kids.
What I don’t understand about TWC is why they offer so few HD channels. This irks me since I have an HDTV. Why can the satellite providers offer 100+ HD channels and TWC offers 5 (plus HBO, plus local channels)?
For that reason, I’m probably going to migrate to either Dish Network or DirecTV early next year.
I side with Viacom in this dispute, but I have to say….how in the world does Viacom claim that their channels account for 20% of TWC viewing?
I’d love to see the math behind that claim. I have to believe they’re excluding broadcast networks, which if true would be disingenuous since that is part of what you pay for when you pay for cable.
I also think it’s clever for TWC to use the fact that the shows are available for free online against Viacom. That’s a fair point. A lot of content providers are alienating their most important partners by making shows available online where they make no money.
I don’t have Time Warner, but I wouldn’t miss a single one of those channels. I don’t think anyone in the house has watched programming on any of them in years. OTOH, I was very angry when Charter switched Soapnet to the more expensive digital tier on a month’s notice and with very confusing wording in tiny print that I suspect was designed to keep customers from figuring it out ahead of time. When I contacted online Charter help (because their phone lines were perpetually busy), the rep claimed to know nothing about the Soapnet change and wouldn’t give me a straight answer.
Well, a month later the channel indeed vanished (along with a couple others, but no new ones were added), while our bill stayed just as high. It’s since been raised to about $56 a month for just expanded basic, which is roughly 70 channels (no pay per view, premium channels, or any other extras). Charter is the only local cable company, and satellite is just not going to happen for us. So it’s either pony up and accept what they want to do, or get hardly any channels.
Viacom needs to think of the consumers first – Please don’t pull these channels from Time Warner Cable or Brighthouse Networks!
http://www.floodthelines.com/viacomdontpullchannels/
I don’t think Time Warner Cable can or should give in because if they do, what will stop NBC Universal or ABC Disney or any of the other companies which own tons of cable channels from trying to shake down Time Warner Cable or other cable companies. If TWC gives in it will set a bad precedent. Also this shows how important Nickelodeon is because if Viacom did not have that channel they could never try this because there other cable channels, including Spike and Comedy Central, really don’t attract that many viewers.
I don’t even like any viacom stations, so it doest’t bother me at all
David, what you’re calling a shake down I would just call getting fair market value for your product.
Earlier this year I did an analysis of what each cable network charges for their product relative to the ratings they deliver. Comedy Central and Nickelodeon are two of the biggest bargains on cable. Spike is not far behind. There’s no question in my mind that Viacom has undervalued these properties.
Honestly, if I were running the negotiations for Viacom I’d turn this into a Dutch auction. Don’t want to agree to a 25-cent increase? No problem. Tomorrow our price is 30 cents, and next week it will be 40.
Hi here is what i have done i am a time warner customer but i am also the mother of 2 children under 13 so nick and noggin are huge . I have called the numbers and issued an email complaint at time warner cable but i have also sent an email to viacom because they are not innocent in this to let them know i will no longer buy their products (toys dvds tc) and i am also encouraging my friends and family to do this as well as suspend their neopets accounts hich viacom also owns and gets revenues from . just something to think about
Very interesting stuff Mikey. That’s the kind of analysis I wish we had access to so we could post it. If you create a price/value metric where do the broadcast networks shake out in such an index? Are they fairly valued? Undervalued? Undervalued relative to the Viacom channels you mention?
My 4 year old daughter watches Nickelodeon, so I asked her for the solution. Since she is not willing to give up her 25 cent allowance to support the channel (the only one she watches), her solution is to keep Nickelodeon and get rid of the cost of all the other Viacom channels. TW could replace them with such potentially interesting channels as ” the dish sale channel”, ” the paint drying channel”, ” the highway traffic channel”, etc. Out of the mouth of babes comes words of wisom.
Eh, what the heck. I’m just going to post the chart.
The HH Rtg for each network is a total day (6a-2a) rating from Jan 1 2008 to mid-August.
I simply divided the monthly subscriber fees, which are from a credible source that I can’t name, by the total day rating to come up with a “cost per tenth of a rating point”
In fairness to NFL Network and ESPN, this chart was produced in August so no NFL games are included. The NFL season will obviously help their ratings, although I would bet that in a year-end update of this chart they would still be the two least efficient channels on television.
The broadcast networks are not included because their sub fee is generally zero.
[comment edited by Seidman: I've cleaned up the table and posted it here, it's very interesting. Thanks, Mikey!]
Hmmm, that didn’t post very cleanly at all, but maybe Robert can make sense of it or make it look presentable.
The first column is supposed to be each network’s total day rating; second column is what they charge per month for their channel; third column divides the second column by the first.
ABC is the Fischer network in Seattle which Dish Network blacked out on 12/17. Similar negotiation conflict. The one problem I have w/ Fisher & Viacom, is it seems to me that they are trying to gauge the cable & satellite companies to make up for a bad economy (which in turn falls on us the subscribers…who are the networks’ audience…to compensate). As audience members, we are the commodity Fisher & Viacom sell to advertisers. The larger the audience (us, the subscribers), the more networks charge advertisers.
So if the media companies are hurting, instead of ripping off their audience, perhaps they should to take a look at their marketing & programming departments. Bad economy or not, if an advertising campaign is working for an advertiser, then they are not going to be pulling it off the air.
Okay, getting of my soap box now
I long for the day we can get cable and choose which channels we want and if we find something new to try we could purchase that additionally.
The cable companies do what they want anyway. This didn’t affect me but it sure upset a lot of people in my area when Cox Cable bumped their religious shows to the Digital Tier after they had been on Expanded Basic for years. No one asks for input; they just expect you to go along.
Earlier in the year they just up and took away our HBO, Cinemax, and Showtime package as an additional cost choice on Expanded Basic. After much prompting to “upgrade” to digital they all just disappeared. At least with these channels they had to stop charging for them since they were extra. Cox Cable really really wanted us to bump up to digital. To begin with I would have had to subscribe to at least two movie tiers to get what I was already getting and I would be getting a bunch of movie offshoots I would never have time to watch.
All they succeeded in doing was lowering my bill thirty dollars. Now if I desperately want to see one of the movie channel’s signature shows I can always buy or rent them for the $360 a year I am saving. As for the movies, for the most part, we saw the ones we wanted to see in the theaters and were buying or renting accordingly anyway.
As I started this out, we don’t need 70 channels, we need the ten to twenty we would actually like to watch, with the option to add or delete.
Catherine, like you I long for a la carte pricing. I’m not sure it will ever happen, though. There are a lot of forces working against it happening and many argue that if it happens, shows like Mad Men, Damages, The Shield, etc., would never see the light of day. I’m not sure that’s really true.
Also, in a “fair” (based on ratings) a la carte model, you’d theoretically wind up paying for the broadcast networks which you currently get for “free” (assuming you wanted the broadcast networks). I personally have no problem whatsoever with this, I do not object to paying for Fox anymore than I’d object to paying for ESPN. But there would be strong opposition to paying for something that was previously perceived to be free.
From what I understand, the “free” networks charge both cable & satellite companies retransmission fees to broadcast local programming. Am I right on this? So even though cable companies say they don’t charge for local programming, the retransmission fees are calculated into the basic cable packaging costs. So really, if you’re not using rabbit ears, you’re paying for local programming anyway.
Wonder how the digital boxes are going to affect the cost of the “free” networks after come February.
Kyle…according to a information spot Dish Network has on a continuous loop on the CBS and Fox channels urging their customers to complain about Fisher charging them ridiculous feeds, cable companies do not have to pay retransmissions fees for the “free” networks but satellite companies do according to some law passed by congress. They said congress is looking into that law this year.
A la carte programming is still a nice dream, isn’t it?
Anyhow, I’m just posting to wish everyone a happy and safe NYE and gentlemen, thanks for this insighful site. You guys do great work and I look forward to what you will bring to us all in ‘09.
I believe that TWC is the one that will loose bacause they will have to deal with screaming costumers demanding to drop them. TWC really cant afford to lose that many constumers and even if they eventually work out a deal, the damage will already be done. Viacom will only fall for maybe a few weeks while people adjust bacause they will get most of their audience back through other services. I am not saying that either is very innocent or the victim here..just that as the time is ticking down that TWC should think about the permanent effect this will have on them and mass exodus from their customer base. (I personally would hate to be on the recieving end of that.) Im sure that DirecTV and the many other TWC competitors are already planning marketing campaigns to take advantage of the situation.
If those channels go dark I can assure you that TWC will recieve many e-mails & phone calls similar to this:
Time Warner Cable we diserve better.
We have been paying more for less.
Now that this is happening..i have a very good reason to drop you.
If you let those channels drop…i WILL drop you without a look back.
Bye-bye TWC….Hello DirecTv…or Dish Network…or other alternate service.
That is all I have to say on this matter.
Sorry if things got confusing at times. I tried my best..but i am only fourteen.
FYI Mikey you described a Dutch auction backwards
Hi Catherine, they did the same to us too down here.
Earlier this year there was a polititian on TV that noted a trend in Canada where, If I could recall correctly, they get to choose which channels they want, instead of a package deal in America, they pay a fee for each individual channel they want or something like that. So they don’t get an excess of channels that they don’t want just to get the nets they do.
I think that if you are calling TWC to complain about this, also inject into the mix that this type of service would be more to your liking than paying for nets you don’t want, like MTV, over nets you do like, such as Nick.
I realize that TWC might loose some sterling cause of it, but Viacom would loose a lot of leverage if people start foregoing Nets they have come to hate like G4, MTV, VH1 – They are all crap as far as I am concerned. I knwo that some cable companies offer an adjusted rate to choose a few channels to make up your own package. But the individual pricing plan I believe is better ’cause there is no limit to the amount of channels you can have.
Anyway, TWC will cave in eventually, but it will need to take drastic measures soon because Viacom has the greater leverage in this dispute and they are not backing down. And a lot of TWC customers will surely switch to DTV because of this.
moonlightfan,
You are right and wrong for how things works in Canada. There are still packages deal.
I live in Montreal and I subscribe to the Videotron cable company, here how it works:I pay $13.99 a month for basic channels package which mean you get CBC both in french and english, CTV, TVA, TQS, Global and a bunch of other TV channels that I don’t watch. No I have no choice but to get those, I cannot choose which channels are part of the basic package.
Then for $8.00 a month I get the Sports combo of Golf channel, FOX Sports world, ESPN, NHL, SPEED, TNS, The Score.
Since I have HD TV I wanted Discover HD so I get to pay $3.99 a month for that.
This is where I get to ‘choose’ for $22.99 per month I can ‘choose’ 20 channels
BUT I have to have a certain ratio of Canadians and USA channels. I have 6 canadians channels, one channel from France the rest is USA channels including ABC, CBS NBC, A&E all in HD and CNN.
For $1.50 I can add a channel to the 20 channels BUT I still have to maintain the canadian vs usa channels ratio.
So, we get to choose a few channels(maybe it is different in other provinces with other cable providers.) but it isn’t the ‘I choose one channel I pay for that channel only’ I still have to pay for channels that I don’t want.
Can you put an X on top of that X now?
Probably the best the thing that could happen to the culture would be to lose MTV. The next best thing would be to lose Nickelodeon, which produces cheap, juvenile programming, or runs ten-year-old cartoons. Comedy Central would be a loss, but a show like Jon Stewart’s would no doubt be picked up by another network. Right now, television programming quality is at its lowest point since the medium came into existence, largely because business managers and financial consortiums have taken over creative control. The dumbing down of America continues to gather momentum.
Ah yes, we need to go back to the intelligent days of Gilligan’s Island, Batman, My Mother the Car, and Bewitched.
Ironically, bad programming was present, but only became prolific after Viacom bought out all those Nets in the first place.
Now I cried when Viacom took control of tech tv, then they mereged it with the gaming net, I speak truthfully when I say that I have never watched G4 Tech TV since.
I mean I tried for old times sake, but could never sit down through an episode of any kind of tv show on that network. And my tv used to be on Tech TV 24/7! I don’t watch A&E anymore – I have watched every Horatio Hornblower movie.
I’m just glad that I was exposed to tv programming before Viacom got into the mix. Decades from now I am going to explain to my disbelieving grandchildren that MTV actually used to show music videos and was cool to watch, I used to wake up and place the tv on MTV and I used to watch it till I left the house.
I’m going to tell them that I never thought that VH1 would become my salvation – that used to be referred to as my grandparents music tv. And even their programming is getting more and more intolerable each season.
Comcast owns G4 and took over TechTV, not Viacom, for the record.
To Chris the TV Sage’s point, it is one of the greatest images I have ever seen.
I just want to know who won.
As I stated a couple of days ago, Viacom had the leverage and TWC blinked first. For those of you who don’t know, TWC made a proposal which Viacom rejected. TWC then asked for an extension of 15 days to work something out… Viacom said nope. TWC promptly came back with a proposal that was acceptable to Viacom and they have an agreement in principal (with details to follow shortly). It was just too big of a risk for TWC to lose those channels for even a day and have a large number of their customers cancel their service in favor of alternative services (they already have a problem keeping their customers from switching to satelite without going black on some of their most popular channels).
Julia, if the unnamed executive in this story can be trusted, it seems Viacom won:
http://www.nytimes.com/2009/01/02/business/media/02cable.html
Coolbreeze, bah. I still don’t think Viacom had all the leverage (though given Mikey’s numbers, certainly they had the higher ground). It would no question have been a customer service disaster for TWC, but tons of customers would not have likely defected at once. The risk of huge and immediate lost revenue was bigger for Viacom than TWC.
That said, running the crawls on the bottom of shows, while perhaps despicable in the sense that even Comcast’s customer service phone lines probably were jammed with calls wondering the fate of SpongeBob, was genius.
Robert,
TWC is already losing customers to satelite and other providers, so they would have lost a lot of customers – and those customers said so when they started calling to voice their concern about the pending situation. Yes, you are right that Viacom would have taken the larger financial hit in the short term. But as I mentioned in my original post their loss would be temp as their customers would return via satelite, internet, or some other source within 30-45 days. Any customers TWC would have lost would have been permanent and that means not only losing customers for Viacoms channels but customers for their entire lineup of channels! So, in the long-term it would have been devastating to TWC!
Now you don’t have to agree with me about who had the leverage, but the fact that TWC caved would actually indicate that Viacom did in fact have the upper hand. You can still disagree, but it you would just be ignoring the facts.
As for using the crawls, that was Viacom using its leverage! Not sure why you would think it was dispicable? If TWC was quite certain how much of their customer base would walk if it lost Viacom’s channels, they simply used the customers to reinforce their leverage and force TWC’s hand. That is a display of using the leverage you have.
I don’t care for TWC or Viacom, so I wasn’t taking sides in the dispute. But I do have a background in business negotiations, and this was a simple one to figure out. If TWC could expect any lost customers to return once they reached an agreement with Viacom sometime after the New Year, then it would have been a different ballgame, but that was the key point in where the leverage was here.
Coolbreeze — I still say bah, but I can tell you exactly why. I’m a much bigger believer in the law of inertia than you are. [edit] that doesn’t in any way make that belief right in this case, and I think it’s pretty clear from the outcome that if Viacom didn’t get exactly what it wanted it got more of it what it wanted than TWC did!
[extra edit] apparently the Viacom crawl confused and worried a lot of people who were not on cable systems that would be potentially impacted by the outage. If so, I find that sort of despicable…
Robert,
well whether we see eye to eye on this matter, I appreciate the informatin you post on this site!
Have A Great New Year!!!
Happy New Year to you too! I was right about the thing that mattered most (at least to me): TWC customers were spared a SpongeBob-less existence! Happy to provide the information, it winds up being a great learning experience. the data on monthly cost/cable network was extremely enlightening.
Spongebob fans probably threatened to send TWC office 25 tons of Sponges.
————–NOT THOSE KINDS OF SPONGES !!! TWC is not Spongeworthy.
Here’s one that’s funny TWC in Ashtabula County, Ohio dropped Cleveland Channel 43 from it basic cable lineup, however if you have a digital tuner you could still get 43 with digital channel 43-1 as well as the other Cleveland station’s.
C.T.T.V.S. Your’re right about Comcast, but it lies on my list as third worst conglomerate ever, with my local cable net, FLOW being first.
I wasn’t the only one feeling the pain either: http://frytrix.blogspot.com/2005/07/i-miss-techtv.html
Well Happy New Year All!
Anyway, although I thought it was pretty ruthless to get the kids involved they probably initialized a worldwide panic ’cause my local provider started airing a statement above Viacom’s warnings stating that their Network would not be affected by TWC’s loss. Gotta give it Viacom, it was classic upstaging in a big way.
Bill and Robert, I just noticed something. I keep seeing this post on the top of the page when I click full blog and I finally figured out why. You need to change the link to /2009 rather than /2008.
Julia, I had that scheduled to do on 1/7 when there will be more 2009 posts. there are many upsides of the theme we’re using for the site, but one downside is there’s no way to link to “full blog” in a fashion that is truly reverse chronological order.