The sports network Versus, owned by Comcast, has been off of DirecTV’s satellite service for three months in a fee battle. More prominently, the Food Network and HGTV disappeared from Cablevision’s lineups in New York and New Jersey on Friday after talks broke down with the owner of the channels, Scripps Networks.
The Food Network costs distributors 8 cents a viewer on average now; Scripps wants a roughly 300 percent raise, according to people briefed on the negotiations. That might seem drastic, but 30 other channels, some with lower ratings, already earn that much. “We were really, really undervalued,” said Brooke Johnson, the president of the Food Network.
For ardent fans of “Iron Chef America,” the Food Network is undoubtedly worth 25 cents a month. But that logic, applied to dozens of channels, can become pretty expensive for viewers. For example, the owners of Oprah Winfrey’s cable channel, set to begin one year from now, are hoping that her star power will be worth 50 cents for each subscriber a month. The channel it is replacing, Discovery Health, gets only 12 cents now.
Consumers already pay dimes or quarters for most cable channels each month, whether they watch them or not. ESPN earns the most by far, $4.10 on average, and is forecast to receive more than $5 a month by 2012, according to the research firm SNL Kagan. Fox Sports Network gets $2.37 on average.
The next-highest paid channel, TNT, gets 96 cents. The Disney Channel, NFL Network, Fox News, USA and ESPN2 each get more than 50 cents. For every channel, the price per month is expected to rise each year.
“We hear from consumers that they are paying too much and getting too little for it. And there seems to be no end to the rate hikes in sight,” Mindy Spatt, a spokeswoman for The Utility Reform Network, said.
Even as consumers recover from the recession, there is little evidence that people are canceling cable en masse, although some know that calling up their local provider and threatening to cancel can quickly earn them a big discount.
Time Warner Cable is not alone in raising rates; higher prices go into effect for DirecTV and AT&T’s customers next month.
In Washington, where proposals for “à la carte” cable pricing were popular in recent years, some lawmakers and regulators now look to the Web as a more attractive, market-driven solution. Viewers will increasingly be able to bypass pay TV service and watch whatever they like online.
Distributors are trying to put a system into effect that will offer some TV shows online to existing subscribers only.
Time Warner Cable asserts that the power ultimately rests with the consumer. “They’re the ones who are going to resist these price increases that the programmers are trying to push,” said Alex Dudley, a spokesman for the company. “One need look no further than the music industry for an example of what happens when consumers feel taken advantage of by an entire industry.”
Lest anyone doubt that Americans, who watch an average of five hours of television a day, cannot part with their sets, look no further than Orange County, Fla., where two football fans sought an emergency injunction to avert a Fox blackout of their alma mater’s bowl game on Friday as the dispute with Time Warner Cable persisted. No one, not even Mr. Murdoch, was going to interrupt their viewing of the Sugar Bowl.
The fans lost the case but won their Fox, as the two companies committed to a new contract about 45 minutes before kickoff. Soon enough, though, those fans will be paying for it.