Time Warner Cable Asks Customers: Should It Roll Over Or Get Tough On Programmer Price Hikes

Girding for battles that loom on the horizon, Time Warner Cable has launched a multifaceted campaign centering on price increases by programmers.
Facing expiring deals with a number of key programmers, the nation's second-largest cable operator is launching a Web site, rolloverorgettough.com, which it says is designed to give its subscribers a voice in what it calls unfair price demands by content suppliers. In announcing the initiative, the operator, without specifying a network or a programming group, says those who operate broadcast and cable networks are asking for "incredible price hikes," as much as 300%.

A Time Warner Cable spokesperson said that when the site goes live this afternoon, customers will be able to vote on whether the operator rolls over, or should get tough, about price increases.

The messaging, at least at first, will be generic: "No one likes paying more. You don't. We don't. Yet, every time our contracts with TV program providers come up for renewal, that's what we face. Price increases. Big ones. Up to 300% more. Sometimes we can avoid passing them on to you. Sometimes we can't. Sometimes, a network will threaten to take your shows away if we don't roll over. Whenever that's happened in the past, we'd make the best deal we could and hope that would be the end of it. But it never was. So no more. The networks shouldn't be in the driver's seat on what you watch and how much you pay. You're our customers, so help us decide what to do. We're just one company, but there are millions of you. Together, we just might be able to make a difference in what America pays for its favorite entertainment."
Time Warner Cable has been engaged in a long-running dispute with NFL Network, which remains on its distribution sideline over pricing and positioning issues. Perhaps more pressing is an array of expiring contracts with various Fox properties, many of which were set to conclude at the close of 2008, but were tabled until this year. According to sources, some of the properties involve include: FX, Fuel, Speed, Fox Soccer Channel, and a number of its regional sports networks. Moreover, Time Warner Cable faces retransmission-consent negotiations with Fox Broadcasting.

The Wall Street Journal also reports that Time Warner Cable faces contract negotiations with services owned by Scripps Interactive, stations owned by Sinclair Broadcasting and The Weather Channel, which is owned by NBC Universal and private-equity firms Bain Capital LLC and Blackstone Group LP.

 "We have some tough choices to make, and we want to make sure we're doing what's best for our customers, so we're asking them to help us decide what to do," said Time Warner Cable Chairman, president and CEO Glenn Britt, in a statement. "We want them to know why we fight so hard on these issues - if we Roll Over, they pay the price. If we Get Tough, they may lose their favorite shows until we reach a reasonable agreement.
"We're not trying to attack programmers, but we need to find a better way to resolve these issues," Britt continued. "Together, with our customers, we just might be able to make a difference in what America pays for its favorite entertainment."

The American Cable Associaion voiced its support of Time Warner Cable's gambit.

"Small cable operators and their customers -- who cannot afford to engage in hand-to-hand combat with price-gouging media conglomerates - urge Time Warner Cable to ‘get tough' with programmers in hopes that some modicum of reasonableness will return to the market as a result," said ACA president and CEO Matt Polka in a statement. "ACA further hopes that these efforts will lead Congress and the Federal Communications Commission to recognize that cable networks and broadcasters regularly abuse their market power -- particularly against smaller cable operators -- both to drive up the cost of cable and deplete capital that could be used to expand broadband in rural areas."