August 31st, 2006

What’s really going on between TimeWarner Cable and the NFL Network?

Posted in  Intellectual Property  Technology 
Author: Tom Giovanetti || Location: Dallas, Texas USA

We've been told for months now by consumer groups and by some of our politicians in Washington that what consumers want from cable is "ala carte" pricing--in other words, they want to be able to pay for the channels they want, and they don't want to have to pay for channels that they don't want.

I've been completely opposed to calls for mandatory ala carte pricing, but it's perfectly fine for cable companies to tailor their offerings in that direction if that's what they think their consumers want.

There are two drivers that I can identify behind the call for ala carte pricing: First, the assumption that it will result in lower cable prices, and second, that people who object to the content on certain channels can feel that their money isn't going towards content that they object to.

The first assumption is economically flawed, and the second assumption ignores the reality of media ownership and the fungibility of money. Logically flawed, in other words.

So, as I said, I'm completely against any kind of regulations or FCC pressure that is intended to force cable companies toward ala carte programming, but I've been waiting to see how this issue plays out in the marketplace.

What happens when a cable company attempts to do something that even slightly resembles that? When they take even a halting step toward trying to package channels so that only those who value the channel have to pay for it?

They get unloaded on, that's what happens.

Here in Dallas, for weeks we have been inundated with radio commercials from the NFL Network asking us to call TimeWarner Cable and complain about them "not letting us have the NFL Network."

Websites have been set up, both by the NFL Network and by TimeWarner Cable in this war of words.

Consumers, especially sports consumers, are confused. They are being led by the NFL Network to believe that somehow TimeWarner Cable is taking something away from them that they are entitled to by virtue of subscribing to TimeWarner Cable.

But all TimeWarner Cable is trying to do is simply offer the NFL Network as part of a "sports package" so that only those who are interested in sports programming pay for the channel. So that people who don't watch sports don't have to pay for the NFL Channel.

This is a perfectly logical and sensible thing for TimeWarner Cable to do, and it's exactly the kind of thing that proponents of ala carte pricing would like to see, I would think.

So how many of you who believe in ala carte programming, and who also crave the NFL Network, support TimeWarner Cable in its effort to move the NFL Network into a sports tier?

And for those of you who are reading and hearing the ads in the media and are confused by what is going on, it's very simple: TimeWarner is trying to do what it can to tailor its offerings for its customers, and the NFL Network is simply trying to pry the largest amount of fees out of TimeWarner by insisting that it be included in the basic cable package, in which case the NFL Network gets a slice out of EVERY TimeWarner Cable customer, whether you watch the NFL Network or not.

It's the market at work. We'll see what happens, but I'm rooting for the ability of companies to be able to tailor their offerings to customers.

Update: There's another angle here that's worthy of some attention. It seems clear that the NFL is embarked on a strategy of strong-arming football fans to the NFL Network. News stories report that the NFL has banned local news cameras from the sidelines of NFL games, which grants a sideline monopoly to NFL Network cameras. How long will it be before the NFL starts charging exorbitant fees for footage, and then putting feature games on the NFL Network only?