Time Warner has taken aim at a study submitted in the Federal Communication Commission's retransmission-consent inquiry by ABC parent The Walt Disney Co. that argues that the cost of video programming is not to blame for rising cable rates.
Disney argues 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 called Disney's study "irrelevant." The No. 2 cable operated countered the notion that rising programming costs don't drive up prices as not being square with the common sense logic that higher marginal costs result in higher prices, if other factors remain constant.
The operator also stated facts backing up that premise. Time Warner Cable said 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 preiod of the study cited by Disney. Over the same period, according to TWC, the per-sub retail price of those services increased 27.5%.
The TWC analysis noted that the Disney study also didn't 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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