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Ringing In The New Year With A Higher Cable Bill Courtesy of Fox and Time Warner

News Corp. and Time Warner Cable have come to an agreement on their dispute just in time for the New Year to get underway. Bottom line is your cable bill is about to rise, all to the benefit of media companies like News Corp., Time Warner and soon CBS, ABC and NBC – no surprise there. The really big winner in all this of course will be the NFL.

Terms of the deal between News Corp. and Time Warner Cable were not disclosed, but it was understood that News Corp. was asking that Time Warner Cable pay them $1 per subscriber per month specifically for the Fox Broadcasting Channel. News Corp. has been provided a broadcast license by the Federal Government courtesy of the FCC, as this has been deemed in the public interest. For the right to use federal transmission lines Fox delivers programs such as “American Idol”, “The Simpsons” and an NFL package. For a viewer’s privilege to watch these programs the viewer pays in the form of submitting to commercials.

Historically as these licenses to broadcast over federal airwaves have been granted for free, the big media companies recouped their full costs (or in fairness to them losses as well) by assuming the difference between what they have to pay for programs versus how much money they have been able to charge advertisers for the right to air commercials within the body of these programs. Today that changed.

Now in addition to making money from the advertising of commercials within their programs, on public airwaves, these media companies (Fox, and likely soon ABC, CBS and NBC) will also collect cable fees from cable operators from their private pipelines.

The results will be that cable costs will rise, these media companies will collect more money in the short term, the tax payers will of course see none of this, and eventually these media companies will ultimately look to abandon the public airwaves all together – look for this display of media baron theater to play out in the coming years. And yes, as galling as all this is to the everyday consumer, the people who must be really fuming right now are all those television station owners on the back of whom these media companies have built their businesses on. It was only in 1986 that Fox launched, and here we are 20 something years later and all those non O&O’s (owned and operated stations) stand to the big losers in this whole thing once their own respective deals come time to be negotiated. Classic!

Posted on Saturday, January 2nd, 2010 Both comments and pings are currently closed.

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