Ending when the ball drops in New York this year is Time Warner’s contract to carry the Fox network (owned by News Corp.). The contract talks have stalled out and is now becoming a standoff. This fight also includes the FX cable channel, a subsidiary of Fox. The central dispute is over the current trend of rising programming fees. While News Corp. feels like they can increase the asking cash fees for carrying Fox, Time Warner disputes that the higher price is becoming unfair. Of course that in turn would lead to higher cable bills for customers that are in the affected area.
This isn’t some small market problem–it could affect New York and Los Angeles, major metropolitan cities that have millions of viewers. If Time Warner doesn’t pay up, News Corp. will have no choice but to yank major programming like football games as well as hit shows. Television ads are being shown alerting the audience of the impending problem and outage. I strongly think that someone will blink first and that Time Warner will have no choice but to pay the higher fees. To risk losing customers over not paying subscription fees is just too much of a long-term problem. Those lost customers would switch to satellite or even online subscriptions, and the revenue lost from those customers would add up exponentially.
If News Corp. is successful in extracting a good amount of cash from Time Warner, this could trigger a domino effect for other controlling companies. They would in turn jack up their fees and down the line we would go. The uproar caused by the potential outages, the threat of customers canceling subscriptions, and projected money lost would force providers to pay up. I know I don’t want a $20 hike in my cable bill. That alone would make me switch to satellite.
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