I was in Sunriver, Ore., earlier this summer for a family mini-reunion and found that the part of Central Oregon centered in Bend is a Mariners-free zone.
Not that I have to see every game like some who believe the team has a chance, but I would have tuned in had they been available. Turns out, though, that the local cable provider has so far refused to pay the higher per customer fees demanded by the regional sports network Root Sports.
Root Sports, and the Mariners, are blacked out in the high desert — on cable, though satellite providers still include the network.
As usually happens, customers/fans blame not the team or the network, but the cable company.
“Does BendBroadband brag about being local yet they drop the most local/regional sports channel available,” wrote one commenter on the Bend Bulletin’s website.
Mostly hidden from cable and satellite customers, these battles over what the providers pay the producers of content go on all the time. Last Sunday, I wrote about the similar tension between cable and satellite providers and local TV stations. As advertising dollars shrink, the stations are seeking other revenue streams, and monthly, per-customer retransmission fees are especially lucrative.
But the difference is that most cable customers recognize that they pay for pay TV while many — if not most — have assumed that over-the-air channels are free. At least I did. I figured the TV stations were thrilled to have clear signals delivered to more homes where viewers could see their ads. And that’s how it used to be before increases in competition for viewers and declines in advertising shares.
Channels such as ESPN, CNN and MTV? I figured they got a cut of what I sent the cable company each month. What I didn’t know was how much they got. ESPN calls itself the “Worldwide Leader in Sports.” It also is the worldwide leader in cable fees, as most recently detailed by The New York Times in its series about the network’s influence on college football. Of the money cable and satellite customers pay each month, anywhere from $5 to $5.54 goes to ESPN. The network’s other channels add to that price.
A review of various pricing studies by The Atlantic estimates that of the $10 billion a year in ESPN revenue, $7.2 billion comes from cable and satellite customers.
MTV? Around 41 cents a month, according to research by SNL Kagen. Fox News goes for around 94 cents, TNT for $1.24, Hallmark Channel for around six cents.
Much of what we buy in various cable packages or tiers is there because it is bundled by the companies that own the cable channels. You may not want Viacom’s MTV Hits, but the cable company is pressured to buy it in order to give you Viacom’s MTV and Comedy Central.
U.S. Sen. John McCain, a Republican from Arizona, has introduced a bill to change regulation of local television, satellite and cable. The aspect that is getting the most attention – and the most opposition from the industry – is that pay-TV distributors would have to give consumers the option of buying only the channels they want instead of having to buy large bundles of channels known as tiers.
What if you don’t care about sports? Industry estimates are that only about 20 percent of TV viewers are intensely interested in sports. But Needham Research argues that if they had to let customers pick and choose — known as a la carte pricing — the price for ESPN might be $30 a month.
I doubt that would happen. Instead ESPN and its parent Disney would have to price the product more competitively once it could no longer hide it inside a cable tier.
Still, the reason ESPN has such negotiating clout is the fact it has something that viewers can’t get anywhere else.
“All the money is in sports because it’s live and people can’t stream it,” said Mitch Robinson of Tacoma, who has worked for both local TV and a cable system when he was a programmer for Click in Tacoma. Root also has clout in the Northwest because it is the only place to see Mariners games.
I wanted the MLB Network and sent emails a few years back to Click asking that it be added. It didn’t appear until earlier this year. But the channel is on an upper tier of the system’s lineup — one that doesn’t have as many customers as basic cable — not the tier that contains the most popular channels such as ESPN, CNN, Comedy Central, Disney and History Channel.
That illustrates one of the basics of cable system pricing, Robinson said. The cable system and the channel provider negotiate both a price per customer and which tier the channel will appear on. The channels want to be where the most viewers are and might take a lower per-customer fee in return. But the cable provider might prefer that the channel appear on a less-popular tier, both to reduce the fees it must pay but also to perhaps drive more customers to purchase that tier.
The bottom line remains, however. Most satellite and cable consumers don’t know what they pay for a given channel – something McCain’s bill might change. And because of that lack of transparency, there is little to discourage cable channels from demanding more and more revenue from cable and satellite, which has led to double-digit increases in cable charges to consumers.
Which is a big reason why more consumers are choosing streaming services or are willing to wait a day or two to watch popular network shows online.Peter Callaghan: 253-597-8657 peter.callaghan@ thenewstribune.com