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From the couch: Cable clash's bottom line
Although consumers are seldom asked to contemplate the specific value within their monthly cable package, a dispute between Disney and Time Warner Cable hinges in part on this question: What’s ESPN really worth to you?
The two companies are engaged in a classic game of chicken, building toward a Sept. 2 deadline. Such skirmishes are almost invariably settled at the 11th hour, although the last major one — pitting ABC against Cablevision — wasn’t resolved before blacking out the first 13 minutes of the Academy Awards telecast in New York.
What’s interesting about negotiations between Disney — on behalf of its cable networks and owned TV stations, including ESPN and ABC outlets in New York, Los Angeles and Raleigh-Durham — is both sides are trying to enlist the public’s aid and sympathy, including radio ads and dedicated websites.
Meanwhile, Time Warner’s competitors — including DirecTV and Verizon’s Fios — are bombarding the public with a steady stream of “Drop Time Warner, switch to us!” full-page ads.
To hear them tell it, each side essentially functions as a charitable endeavor, one that only cares about the consumer and keeping their cable bills cheaper. It’s the other huge corporate media behemoth that’s a greedy pig.
Recommended viewing: “Friday Night Lights” is in its fifth and final season, with episodes currently airing exclusively on DirecTV. If you’re not watching the show, you’re missing one of the best sports-related dramas ever done. The series finale will air on Feb. 9.
According to a survey by SNL Kagan, ESPN is by far the most expensive basic-cable channel, earning $4.10 a month per subscriber. By way of comparison, excluding Fox Sports West (a distant second at about $2.35 a month) and other sports networks, that exceeds the next half-dozen basic cable channels combined.
Now, if you regularly frequent this site, I suspect you’d rather lose an arm than ESPN. But remember, it’s not just serious fans and “SportsCenter” junkies who shell that out, but grandmothers who live alone (maybe with cats) and couldn’t give a damn about Auburn vs. Alabama.
Just do the math: ESPN’s monthly fee, times more than 100 million subscribers in the U.S., times 12 months a year equals close to $5 billion — and that’s before the sports titan has sold a single ad on TV or online. Given that, it’s no wonder ESPN has outbid rivals for so many major franchises, making the network ever-more indispensible.
Yet this skirmish is playing out amid a very tight economy, where many people are being forced to cut back on expenses. Against that backdrop, both companies know there are alternatives — among them dropping cable (“cutting the cord,” it’s called) and relying on Internet connections or services like Netflix. (Disney has even dubbed its website ihaveoptions.com, while Time Warner went with rolloverorgettough.com.)
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The bottom line is raising fees for big networks — including the relatively new practice of paying broadcasters, like ABC, CBS and FOX for their signals — won’t happen without tradeoffs.
Knowing that cable and satellite bills can’t keep escalating without risking blowback from consumers, the victims could include smaller channels, like Versus, which wouldn’t sit well with hockey fans. Indeed, consumer advocates have pressed for a la carte pricing that would allow people to order only channels they want — potentially making it difficult for some networks devoted to such niches to survive.
Even ABC’s own affiliates don’t fully trust Disney when it comes to ESPN. Earlier this year they complained the network was shifting some sporting events to cable — at the broadcast network’s expense — precisely so they could wring more money out of cable operators. Disney denied the charge, but Southern stations in particular have been irked to see more NASCAR driving over to ESPN.
Despite the posturing and finger-pointing, Disney and Time Warner will eventually reach a deal, but their war of words has already invited consumers to consider where their money goes. And while both sides will ultimately make out fine, amid those questions about a fair price for ESPN and cable in general is the little matter of where the breaking point lies before consumers go broke.
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