Time Warner Cable has taken aim at a study submitted in the FCC's retransmission consent inquiry by ABC parent Disney, which argues that the cost of video programming is not to blame for rising cable rates.
Disney asserts that "relatively modest increases" in cash payments to broadcasters for carriage of their signals does not "significantly increase" cable rates, citing a study that concluded that allowing the marketplace to set retransmission consent prices has a minimal effect on the price of service to consumers.
In its own analysis of the Disney study, submitted to the FCC this week, Time Warner Cable says the study is "irrelevant," and that the suggestion that rising programming costs are not driving up prices does not square with the common-sense notion that higher marginal costs results in higher prices if other factors remain constant.
It also says the facts back that up. TWC says that per-sub, per-month programming costs for basic and expanded basic rose 67.3% across all multichannel video providers between 2003 and 2008, the period of the study cited by Disney. Over the same period, the cable operator says, the per-sub retail price of those services increased 27.5%.
The TWC analysis says the Disney study also did not take into account the "dramatic" sub growth to cable's broadband and phone services. "As a result, it is no surprise that video programming costs have become a smaller fraction of total company revenue (or total company costs) of the cable operators; starting from a lower base, the new products are simply growing much faster than video."
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