In case you weren't following the news over the holidays, an interesting media story was gaining momentum with Time Warner threatening to drop Fox Broadcast networks from its service. When I saw that headline, it registered a quick snort with the thought, "Yeah, like that would ever happen." Indeed, it appears a deal has been struck to keep Fox a part of Time Warner subscribers' lives -- shocker! But the New York Times has a good article today breaking down the fight, and explaining what it means in the broader context for cable subscribers: higher bills.
The reason why Time Warner threatened to drop Fox was because its parent company, News Corporation, was demanding subscriber fees for the Fox Broadcasting network. Traditionally, the non-cable networks, like Fox, ABC, CBS and NBC had relied entirely on advertising for their revenue since anyone could view their local affiliates with an antenna. While most cable networks also got some advertising money, they also relied on fees paid by subscribers from companies like Time Warner and Comcast who bring their channels to their customers.
According to the Times, CBS started asking for fees a few years ago. Obviously Fox demands them now too. It says the others are likely to follow.
As you can probably guess, cable companies are hardly going to let these new fees hit their bottom line: they'll just charge consumers more. Indeed, Time Warner has already announced a rate increase likely related to the Fox deal. Expect those fees to increase as ABC and NBC eventually cash in.
Is it OK that the networks are forcing viewers to pay for content? That depends on your view of the world.
On one hand, if cable channels are profiting from, both, advertising and subscriber fees, why can't the traditionally non-cable networks? In this day and age, fewer and fewer people are relying on antennas anyway. The distinction between cable and non-cable channels seems so. . . 20th century.
On the other hand, these companies appeared to be doing pretty well based on advertising revenue alone for decades. Why the sudden need to milk cable customers out of additional money to pad network executives' pockets? As a consumer, I'm certainly not pleased that my bill may be going up by a few dollars.
Of course, this all boils down to the important contemporary question of whether media should charge for its content, rely purely on advertising or do both. That's the question that Internet news sources are struggling with. But with cable the quandary develops a different dimension. You can decide whether or not to subscribe to the Wall Street Journal online, but if you don't like MSNBC, you're probably out of luck. Few people have the ability to decide which cable networks they get on an "à la cart" pricing basis.
But the Web will likely transform this debate for TV as well. Technology appears to be increasingly moving towards a sort of content-agnostic world, where the web will be where we access all forms of media, whether print, radio or TV. So while it's fine for us to quibble over this latest trend for non-cable TV networks, I suspect it's just one step in an evolution leading to a new world where all of our media consumption will be very, very different.
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