This ultimately will be a big story for the economics of the broadcast TV business, if less so for the fans.
Rupert Murdoch wants to charge for access to news-oriented Web sites in the News Corp. portfolio. Now, he’s determined to extract fees from cable and satellite operators to carry the Fox network.
At a company shareholder meeting Friday, the CEO said cable and satellite operators need to pay News Corp. “a small portion of the profits” they gain from offering the Fox network.
The model does not appear to be novel. News Corp. would seek retransmission consent fees from all distributors to carry the Fox-owned local stations. And the company has some leverage — owning the Fox outlet in nine of the top-10 markets.
“We realize this is going to be a tough challenge,” he said. “And we’re determined to take a leadership position in creating an economic template for the future.”
But CBS has pursued that path, as have multiple station groups.
via MediaPost.
Yeah, I know fans don’t care, but this really is THE interesting story.
Why should Time-Warner make more on TBS and TNT for their stations to be carried than FOX which is watched much, much more. Same for the other broadcasters, but not sure if the owned and operated mix is 9 out of 10 for them.
There will be a lot of kicking and screaming here, from all parties.
Well, either Broadcast finds another revenue source, or it’s sunk. They need this, and much more.
It does mean the era of free TV will soon be over I think. First the nets charge cable companies, then they stop broadcasting for free over the airwaves. It’s only a matter of time.
Whatever fees News Corp gets will be passed along to the consumer. Therefore tens of millions of people who never buy News Corp products will be forced to pay for them. The cable and satellite companies will be forced to pay or Sir Rupert will threaten to take away his “American Idol” from them. You would think that four billion dollars would be enough for Sir Rupert.
I saw a movie once where some gangsters moved into a town and forced up the price of milk by threatening the trucks of the milk deliverers. The police got wind of the racket and arrested the gangsters in the end.
Philospher Jay, were you up in arms with that outlaw Les Moonves when CBS affiliates negotiated similar deals?
Didn’t think so.
Jay, do you understand how the cable model works? Pretty much half a cable networks revenue is from carriage fees.
Millions of people who wind up paying for ESPN, A&E, Bravo, CNN, AMC, TNT, HGTV, The Golf Channel and DOZENS of other channels who NEVER watch those channels…and still pay for them.
Bill, can I ban Philosopher Jay for being a ridiculous conspiracy theorist?
I never watch HGTV! IM BEING RIPPED OFF! IT’S A CONSPIRACY! HALLLLLLLP!!!! SOMEBODY CALL THE POLICE!! CITIZENS ARREST!
Perhaps Philosopher Jay should keep his crazy conspiracy theories to the cable news posts. And keep them on topic, even there.
the problem with crazy is it knows no boundaries. I don’t think Jay has the restraint to resist any post with a picture of Rupert Murdoch.
@Bill and Robert
Don’t you know that anyone trying to make a profit is pure evil?
I wonder if News Corp is lumping MyNetworkTV together with FOX in their re-transmission negotiations.
In the first three weeks of this season, MyNetworkTV is having their best numbers yet with their syndication/programming service strategy that mixes series encores (’Law & Order: CI’ and ‘The Unit’) with fresh programming (’WWE Smackdown’, ‘Are You Smarter…’, ‘Deal or No Deal’, ‘My Thursday Night Movie/Special’).
So if as the story says, Fox will be less reliant on ads revanue, does that mean that coveted 18-49 demo will not mean as much as it did before?
Vince I’m sure the Demo would still matter, Fox can use that to sell ads and negotiate the carriage fees. So I don’t see much changing when it comes to looking at the ratings.
Vince, I doubt that having multiple revenue streams for broadcast affiliates will decrease the interest in maximizing each one on its own. And advertisers are still going to want demo group eyeballs, so if you’re hoping for non demo group eyeballs to suddenly matter don’t bother.
Unlike TBS, TNT and all the other cable networks including FOX News, there is no place for the cable provider to insert their own commercials.
I also wonder how this bumps up aginst the “Must Carry” requirements where cable companies are required to carry the local broadcast stations?
I also wonder how this bumps up aginst the “Must Carry” requirements where cable companies are required to carry the local broadcast stations?
The way Must Carry works is the cable company must carry a station if the station asks them to for free. But the station has the right to negotiate carriage fees, which the cable company is not required to pay. Fox is only negotiating for carriage fees for those stations that they own, so it won’t affect any non-Fox owned stations.
And what if they cable companies say no? Would Fox seriously pull its signal? It hurts them more than it hurts the cable operators.
Bitey, I don’t think these negotiations are necessarily like those between Versus and DirecTV, which lead to Versus being dropped, but I may be wrong
I stand by my statement that the BIG 4 that have cable needs to cut their cable channels to 2-3 and be leaner companies that produce quaility not quantity
It hurts them more than it hurts the cable operators.
Particularly since Fox owns stations in all of the top 5 markets, and most of the top 10. I don’t think anyone would call Fox’s bluff, but if they did, I don’t see Fox actually pulling their signal.
Hi Robert and Bill,
Having to pay for things I don’t use is one of the reasons I got rid of my cable and satellite programing a couple of years ago. People should be upset about that. It is an unfair practice. What if you went to a doctor and he said, “I’ll give you an appendectomy, but you’ll have to have an heart operation too because it is more profitable for me?” How about if the only fast food chain in town said, “I can’t just sell you the hamburger, you have to have the combo because it helps me make more money.”
I don’t know about the CBS deal and if it is the same thing that Sir Rupert is proposing. Are you suggesting that there’s a conspiracy between them that needs to be investigated? I hadn’t thought of that. Thanks for bringing it up.
Jay, I wanted to give you the benefit of the doubt as just being crazy, but I see you’re 100% troll. Feel free to go elsewhere.
really, Bill? after weeks of dumbass comments on the cable news posts you wanted to give him the benefit of the doubt? That Jay was a troll with an agenda (and facts be damned!) was as obvious as Balloon Boy being a hoax as soon as CNN uttered the words “Parents have appeared on Wife Swap…twice!”
At least prior to now his trollish behavior was contained. Give the trolls the cable news posts. It seems like they are the only ones who read them anyway.
“Let them eat cable news!”
Actually the “paying for things we don’t use” issue is the cause of a TON of problems in life and politics. Maybe that’s the key to almost every economic issue. I won’t list them all because they are only related to this web site when its discussing cable channel carriage fees.
I think there should be an ala-carte system for cable television. The cable companies will probably want a minimum monthly fee per subscriber. So perhaps $25/month for 25 channels. After that, $1/month per channel. Would be nice not to pay for the channels I don’t watch.
I got to go with Dingo on this. If I counted all the channels I watch it is less than twenty five, yet I pay for 200 or more. Wow, I guess we are anti-business for not wanting to pay for things we don’t want. To get Animal planet on TWC is one extra tier that has many channels I don’t want. To get DIY that I do watch, I get 15 more channels that I never watch. It’s stupid. It’s not a Rupert Murdoch thing with me, it’s dollars and cents.
Don Nelson, I understand people’s desire for a la carte pricing. I share it. But, I don’t think the existing model is necessarily stupid. It has its problems, but it offers a lot of diversity. Without the bundled pricing/carriage fees arrangement, many of the smaller networks would simply go away altogether. People won’t mind when it’s channels they don’t watch that go away, but when it’s channels they do watch (say DIY, in your case) they will mind.
“And what if they cable companies say no? Would Fox seriously pull its signal?”
Absolutely. There’s no credible alternative.
“It hurts them more than it hurts the cable operators.”
Couldn’t disagree more. Consider this Les Moonves quote from a Forbes story published today: “Try running a cable network without the Super Bowl, the Grammys, CSI, The Final Four, Survivor and David Letterman.”
Now, he means a cable SYSTEM not a cable network, but his point is made. No cable operator can compete in the marketplace with satellite or Fios if they don’t have the Super Bowl, American Idol, NCIS, etc.
The thing you have to remember is that developing a second revenue stream is an existential crisis for broadcasters. If they fail they will eventually go out of business, period. So if a cable operator refuses to pay a network, that network absolutely MUST pull their signal or they will lose all credibility in subsequent negotiations.
Threatening to pull a signal and then not pulling it would be like writing a death sentence for your own business.