I used to watch Nickelodeon a lot as a kid, and every few years, I’d see dramatic commercials about how Time Warner Cable was going to take away my Nicktoons (and several other Viacom channels). As a consumer, it’s easy to see those commercials which place the blame on the cable company, adding it on to the list of grievances with Time Warner Cable. However, looking into the disputes and seeing things from Time Warner Cable’s (or any pay TV provider) side, you may start to side with the cable company for once.
Here’s how pay TV works (more officially known as MVPD or Multiple Video Programming Distributor), whether it’s cable, satellite, or an online live service (otherwise known as a vMVPD, with the first V being virtual). The pay TV provider pays media companies to broadcast their channels, called a carriage fee, and then you, the consumer, have to pay for the fee in your cable bill, along with the infrastructure and support staff needed. The carriage fee is calculated per subscriber, and Nickelodeon currently charges around $.78 per subscriber. If you’re DirecTV with, say, 20 million subscribers, having Nickelodeon on the lineup means DirecTV pays $15,600,000 every month.
And that’s just for Nickelodeon. To carry Nickelodeon, Viacom forces DirecTV to carry the rest of its cable lineup of Comedy Central, MTV, BET, Paramount Network, and others, all with their own monthly carriage fee. In return, the agreements media companies sign generally state the content airing on the channels must air first on the channels rather than a streaming service. It’s why most streaming services have at least 24 hours of time between airing on the channel and airing on a streaming service.
We can all agree on a few things: we would all like to make more money, and spend less of it. In the case of pay TV providers and media companies, pay TV would like to spend less money, and media companies want to make more. And regardless of viewing habits shifting to streaming, media companies would still fight with pay TV providers to increase their carriage fees.
This time around, NBCUniversal (or Comcast) is asking for more money, and possibly a few more things. NBCUniversal and its networks NBC, USA, E!, SyFy, and others are having issues like any other linear television service. Viewership is down while costs continue to rise. To renew its NFL contract to keep the likes of Amazon Prime and other streaming services from taking the only thing that brings a massive audience to NBC and its sports networks, Comcast had to pay around $2 billion per year for ten years. And that’s just for the rights to broadcast NFL games, as Comcast has to pay for equipment and staff to produce the shows. That’s a lot of money that NBC would like to pay for with higher carriage and retransmission fees.
Now, more than a few years ago, carriage disputes were obviously bad for both sides as pay TV providers need networks to sell a service, and media companies need pay TV providers to get their networks out there. The more households a network is in, the more ad revenue and eyeballs are potentially out there. However, at this point, pay TV is on a serious decline, and with Comcast looking to bolster up their streaming service Peacock, it seems less and less in their interest to fight fair with pay TV providers, especially as Peacock streams NFL games with their premium service. If they can’t get your money from carriage fees, they’ll get it directly from you.
Reports also indicate that Comcast wants to bundle Peacock Premium with YouTube TV. YouTube TV does offer other streaming services as add-ons, but Comcast wants this as part of the base YouTube TV package. In addition to asking for more money for their networks, bundling a Peacock Subscription would undoubtedly raise the YouTube TV price. Not to mention there are reports that Comcast is looking to start its own vMVPD cable service, and Comcast has definitely set a precedent of using anti-competitve tactics to bolster its own products. When G4, the video game channel started in 2002 owned by Comcast, it dropped TechTV, its only competition, from Comcast’s cable lineups. A few years later, Comcast bought TechTV to merge with G4, TechTV was available in some 43 million households and G4 was only in 15 million. It is assumed TechTV’s value was worth less with Comcast’s 14 million households not included in that number. With that, and countless other examples, Comcast could be using this carriage dispute as a way to not only prop up Peacock as a stable solution, but also this upcoming Xfinity vMVPD service.
While YouTube TV has had its issues in the past, like the current outage on Roku, and the addition of Viacom channels which drove up the price from $54.99 to $64.99, it sure seems like Comcast is being particularly unfair in this dispute. As a YouTube TV subscriber, this isn’t what I want to see happen, but should NBCUniversal be removed from my lineup, at least YouTube TV has announced it will lower the monthly cost from $64.99 to $54.99, which will make me happy (in addition to my $10 off coupon from T-Mobile). It won’t affect me too much, as I have an antenna for NBC, and a free subscription to Peacock should anything happen on the NBCU networks of note.
We’re getting to the point where it would be in the networks’ best interest to lower their carriage fees, if they want to maintain any dominance with their brands. I’m honestly wondering if they are purposefully raising their rates at this point to drive consumers to their streaming services. The Discovery CEO stated they make more money per subscriber with D+ than with cable, and while they may not be exactly the case with every streaming service, I would imagine media companies would rather deal directly with consumers. Either way, I hope NBCUniversal and Comcast can work something out, as YouTube TV is the most popular vMVPD right now. If NBCU gets dropped, we’ll see how that number changes.