Cable consolidation could help temper programming cost increases for the distributors that are getting bigger, but maybe not as much as they hope.
Telsey Advisory Group analyst Tom Eagan staked that claim at last week’s Multichannel News webinar about the potential impact on programmers of the consolidation moves, led by Comcast’s pending acquisition of Time Warner Cable.
Programming rates tend to rise as consolidation occurs among distributors and even among content providers, he observed.
Between 2003 and 2005, when Cox Communications went private and Comcast made an aborted attempt to buy The Walt Disney Co., regional sports networks’ fees rose 22% due to increased penetration for YES Network and Fox Sports Net.
Between 2006 and 2008, when Adelphia Communications’ 5.3 million customers were split between Comcast and Time Warner Cable, programming costs increased 19% overall, due in part to widened distribution of NFL Network and ESPN2.
Between 2009 and 2011, when Comcast bought a controlling interest in NBCUniversal and Cablevision Systems acquired cable operator Bresnan Communications, retransmission-consent fees rose a total of 80%.
And in the past three years, programming costs have risen an average of about 10%, according to Eagan, even as audiences have fragmented.
“Will content providers consolidate?” Eagan asked during the webinar. “We’ll see.”
The smarter way to stay on top of the multichannel video marketplace. Sign up below.