Cable, Satellite, Telco TV Providers Will Have to Do Something About Programming Costs

AT&T and AMC Networks have settled on a new contract, after going to the brink of non-renewal.


Dish Network, which has been engaged in a contract dispute with AMC Networks, appears ready to drop AMC from the Dish line-up, giving AMC’s channel positions away to  HDNet Movies. That unusual move illustrates the growing tensions within the video subscription business between distributors and content owners.

Though cable, satellite and telco TV distributors often risk consumer ire over monthly bills that almost routinely grow every year, faster than the overall rate of inflation, distributors maintain, not without reason, that such price increases are driven by higher carriage fees paid to the programming networks.

By its own estimates, about 41 percent of Time Warner Cable operating expense is content acquisition fees. About 57 percent of on-going cost is all other operating cost, including network operations, marketing, customer service and other overhead.

A la carte programming, with consumers able to buy single programs as they wish, or whole channels, if that is what they wish, is the great fear of executives in the video distribution business (cable, telco, satellite video services).

But some might argue that if consumer prices for such services continue to grow consistently at rates far above the background rate of inflation, latent demand for such services will grow.