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PROGRAMMING COSTS

The price you pay to watch your favorite TV shows is driven largely by the cost of the programming. Distributors like TWC pay the networks for their programming, package it and resell it to consumers.

That’s right–cable and satellite companies pay a fee for every household that receives a particular channel, regardless of whether anyone in that household even watches it. And those fees directly impact how much you pay each month. (Learn more about how TV distributors put together video packages.)

In the past, fees paid by companies like Time Warner Cable to provide their customers with cable networks like ESPN, MTV, CNN and Fox Sports were set in private business negotiations. Customers rarely knew those negotiations were taking place.

But in recent years, those negotiations have become more public as cable networks tried to leverage the popularity of their programs to demand unreasonably high fees from distributors. As a result the fees companies like ours must pay to provide those cable channels have continued to rise higher and higher.

At the same time, local broadcast stations are demanding significant fees from companies like Time Warner Cable to distribute their networks, which are all available for free over the public airwaves and via the internet. This is called “retransmission consent” and is allowed under outdated federal rules and regulations.

Retransmission fees paid by TV distributors like Time Warner Cable have become a huge source of revenue for networks and local broadcasters. That’s in addition to the money they already make selling advertising on their programs. Those “retrans” fees skyrocketed from $215 million in 2006 to more than $3 billion in 2013, and are projected to eclipse $6 billion in 2018, according to independent media researcher SNL Kagan.

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*Source: SNL Kagan

So in the past few years, Time Warner Cable and other distributors have taken a stand against huge fee increases by both cable networks and local broadcast TV stations.

Sometimes that results in a public dispute, with blacked-out channels and both sides using TV, e-mail, corporate blogs and advertising to tell their side of the story. And customers are caught in the middle. Time Warner Cable customers need to know that we don’t like public disputes either. But we also can’t continue to let your bills go up unchecked due to out-of-control programming costs. We have a responsibility to make sure our packages are delivering the best value, so sometimes we end up in a public dispute.

When this happens, TV networks will often say something like, “But we’re only asking for pennies a day.” But we know—and you know—that pennies add up fast.

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From the example above, you can see what would happen to an average customer’s monthly bill if we just went ahead and paid every channel that asks for “just a few pennies more.” To make sure we continue to deliver the best value possible, we look closely at every single channel on our lineup every time our contracts are being renewed—not only at the cost, but also viewership of the channel, whether it offers unique content, and a whole host of other factors.

What about buying channels individually, or a la carte? Learn more here.