Monday, December 28, 2009

Murdoch fights the delivery-content war in another arena - cable television

Poor Time Warner. Everyone's beating up on them these days. The latest salvo at Time Warner comes from uncredited commercials which warn you, in dire terms, that Time Warner may pull Fox off its systems on January 1, which means that you'll miss FOOTBALL! So go to our special website now, and tell Time Warner that you want your Fox!

Needless to say, this is yet another cash move in the war between content providers, such as Fox, and delivery channels, such as Time Warner.

BusinessWeek covers the story:

The News Corporation is threatening to remove its Fox stations from Time Warner Cable systems at the end of this week if the cable company does not agree to pay sizable subscriber fees, the same way it does for cable channels. In negotiations, the News Corporation is pushing for about $1 for each subscriber, potentially setting a precedent for broadcasters that are seeking a new revenue stream to offset advertising declines.

Time Warner Cable is playing hardball, running an advertising campaign to prepare viewers for the prospect of a January without college bowl games or “American Idol.” The company’s so-called retransmission agreements covering Fox’s stations in New York, Los Angeles, Dallas, Orlando and other cities expire on Dec. 31.

It turns out that News Corporation isn't the only company demanding these fees - CBS has demanded these fees also, although apparently not at the dollar a subscriber rate.

The timing could not be more perfect, since News Corporation is also trying to wring money out of people who provide access to their internet content.

And possibly the same arguments apply.

The next time that Fox bellies up to its advertisers and asks for an increase in fees, the advertisers could very well answer, "Why should we give you more fees when you're effectively reducing the size of our audience by threatening to pull your content off of Time Warner Cable?"

If you try to extract money from EVERY pocket of the consumer, you may end up getting nothing at all.
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