Sports carriage fees may threaten cable business model


A bitter retransmission battle is being waged in America’s #1 media market, and as is very often the case, it has nothing whatsoever to do with broadcasters. At this point, Time Warner Cable is so frustrated with the Madison Square Gardens network that it is thinking about letting consumers decide if they want to pay to have it or not.
According to Wall Street Journal, about 2M area TWC subscribers could lose the service if a new agreement isn’t reached by year’s end. MSG carries the NBA Knicks and NHL Rangers.

An industry estimate puts the monthly per-sub price of two MSG channels at between $2 and $2.50. TWC says it that the price is already high, but it was willing to go up another 6.5% or so – but MSG wants to go up 53%. MSG says this is a complete mischaracterization of its negotiating stance.

What the situation did do is cause TWC’s Glenn Britt to suggest putting certain sports programming on a separate tier of its own that TWC subscribers could pay for or not at their own discretion, relieving non-sports fans of forced underwriting for the sports viewing of others.

RBR-TVBR observation: This is yet another sign pointing toward a la carte. The concept has been brought up for years now, by content activists who don’t want offensive cable channels shoved down their throats, and by consumer activists, who don’t want to pay for channels they don’t watch.

The activists have found support over the years on both Capitol Hill and at the FCC. In the latter case, a la carte proponents had a huge ally in the person of former FCC Chairman Kevin Martin. John McCain (R-AZ) has been a vocal proponent on the Hill in years past.

The MVPD business model doesn’t figure in a la carte, and many have argued that many marginal but important niche services would be lost if forced to rely on actual consumer subscription decisions for their survival.

But more and more, rapidly increasing prices for program services, particularly in the sports area, have MVPD operators themselves calling for some form of a la carte. We don’t know if the industry is really moving in that direction, but it sure does seem like a la carte is increasing in gravity as time goes on.