Time Warner to cut costly channels with low ratings

The amount of money the cable company pays to content providers is "out of whack," says CEO Glenn Britt.

By Minyanville.com Dec 4, 2012 2:48PM
A senior man watching TV copyright Image Source, Getty ImagesIn the cable world, there's a constant price war between pay TV operators and content providers. This year, we've seen a number of high-profile carriage disputes between the two sides.
 
AMC (AMCX), for example, is now engaged in fierce contract re-negotiations with Verizon (VZ), and has warned that Verizon customers might soon lose its channels. Over the summer, DirecTV (DTV) and Viacom (VIAB) also had a contractual skirmish that resulted in a 10-day blackout of Viacom channels for DirecTV customers before a carriage deal was reached.
 
Indeed, pay TV operators have become more and more vocal with their complaints about how programming costs have become increasingly expensive.
 
Last month, DirecTV CEO Mike White said in an earnings call, "I think we're going to continue to see very, very tough discussions by all distributors with content providers, to try and mitigate these outrageous cost increases that are unaffordable to the average customer."
 
The latest to fire a salvo is Time Warner Cable (TWC) CEO Glenn Britt. Speaking at the UBS 40th Annual Global Media and Communications Conference, Britt said, "We're going to take a hard look at each service, and those services that cost too much relative to the viewership, we’re going to drop them."
 
Britt noted that since 2008, Time Warner's programming cost per customer has increased by more than 30%, while the prices it charges video customers have only gone up 15%. The amount of money his company paid to Hollywood giants was "out of whack," he said.
 
"If you have a network that has hashmark ratings [low audiences] and isn't going anywhere, we're going to have a different conversation" when Time Warner renegotiates contracts after the current ones expire, compared to those "we had with them five, six, or 10 years ago," added Britt.
 
Cable TV operators have struggled with cord-cutting in recent years, with anemic growth in the market as customers turn to the likes of Netflix (NFLX) and YouTube (GOOG). In the third quarter of 2012, the cable TV industry as a whole lost 127,000 subscribers.
 
Britt said that cord-cutting "appears to be fairly minor at the moment," but nonetheless said that to the extent that it is happening, some of the blame has to go to content providers. "Programming and packages keep getting more and more expensive. This stuff is just starting to cost too much," he said. "It's out of touch with consumers. It can't continue that way for another 10 or 20 years." 

At the start of the year, Time Warner engaged in its own fierce dispute with the MSG Network (MSG) over high costs, but the cable giant eventually relented after Jeremy Lin reignited fan fervor over the New York Knicks.

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14Comments
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People, eliminate thise overcharged bills. Buy and antena for local channels, get Tv apps on your smartphone or tablet , like DRoidTV, Hulu+, Netflix etc its there are also for sports and you stream them to your tv trhrough wifi... I paid $36 for two year worth of apps to watch my shows and $100 on a good antenna from an electronic store 2 years ago and dumped Dish, that was charging me $45 a month...Now I watch what I want when I want to!!
Dec 19, 2012 8:43AM
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Time Warner's Corporate Office is absolutely worthless.  Their executive staff, talks over you, and how dare you talk bad about their hero, Dictator Obama-Stalin. The tech couldn't undo a trap across the street, and get my service running (takes 5 minutes) I think people need to complain to the franchise authority and get the city to mandate a la carte. So I have to wait 2 freakin days to have cable in my unit.  (Even though they are right across the street!) Time Warner needs to be sued like the Baby Bell's and broken up!!!! 
I will be soon moving to a Grande Service Center area!!!! 
Dec 5, 2012 10:56AM
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Give me an option to eliminate the SPORTS channels, the SPANISH language channels, the MUSIC VIDEO channels and I'll be a happier subscriber, with more money left in my pocket at the end of the month.

Dec 5, 2012 10:15AM
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Ala-carte programming. Let us pay for the channels we want. I'm certain that my total cost would decrease. And if that means that some channels disappear, then so be it. That'd be market driven. if not enough people go to a restaurant, it goes out of business. The same thing here.
Dec 5, 2012 8:45AM
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I am not sure why programmers are saying their costs have increased, every other show these days, or more, are reality tv which has a low cost to the programmer. It is also one of the reasons I rarely watch many of the channels these days. In regards to reality TV, I like the home DYI shows and Survivor, they could get rid of all the rest in my opinion. I am tired of people acting like idiots on my television.
Dec 5, 2012 5:24AM
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I do not understand how cable TV works. It seems that networks should pay the cable companies to carry their programming not the other way around This would drive competition and much lower cable bills. If I owned a cable company with over a million customers you would pay me to be on my cable not me pay you. This also might improve the quality of the content.
Dec 4, 2012 11:47PM
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Never have been able to understand WHY the customer can't pick in groups of channels to pay for what they want. With everything digitalized now that would be an easy thing for Comcast , Directv and the rest to do! The time has come and if the Govt. entities that hand out contracts were actually working for their constituents it would happen!
Dec 4, 2012 10:25PM
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Oh good! Does this mean our bills will go down! After all...when they raise the price they say it is to cover the cost of those channels!
Dec 4, 2012 10:05PM
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customers have been screaming for ala cart pricing for ages.  Now maybe we will get it. if you're not into sports, why should you pay for it?
Dec 4, 2012 9:21PM
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Time Warmer, Verizon, Direct TV and Dish and all other cable operators should be very hard on these cable channels and on how much they will pay for content.  I don't like to pay for each channel on a individual basis just because it is on the cable.   I never watch ESPN so I don't need it or 10 golf channels on my set .  I have Verizon and have hundreds of channels and most of them I never watch but they cost me money monthly.

I say if the providers want to jack up the fee 20 or 30% just dump them. 

Dec 4, 2012 4:09PM
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Over 200 HD channels ! and very few that have decent content. Channel Master receives free Over the Air Channels ! and comes with 2 month DVR, and wifi so you can watch netflix etc etc. lets watch what we want and not what they make us watch for their oversized bill.
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