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Time Warner Cable readies lower-tier video package

Fri, 11/19/2010 - 7:25am
Brian Santo

MSOs are threatening to craft entirely new programming packages that don't include the most expensive channels, the latest development in the increasingly contentious power struggle between multichannel video program distributors (MVPDs) and programmers.

Time Warner Cable is ready to introduce such a tier, according to several reports from the SNL Kagan conference, and Cablevision sounds sympathetic, if not ready to do the same.

Disney, in particular, has successfully been able to charge tremendously more for its channels and to continuously jack up its fees. ESPN is by far the single-most expensive channel available. Furthermore, Disney, Fox and other programmers with popular content tell MVPDs that if they want the popular channel, they must also air – and pay for – a set of other channels the MVPDs (and their viewers) might not want.

MVPDs, of course, must pass the costs along, aggravating many of their subscribers.

That problem might be diminished if MVPDs can offer channel packages that don't include the most high-priced channels.

Analyst Craig Moffett, who moderated the SNL Kagan panel during which TWC chief marketing officer Sam Howe made the announcement, provided some details:

  • TWC's "TV Essentials" package will be released in mid-December. It is currently being test-marketed at $39.95 and $29.95 per month. ESPN and the Disney Channel will not be part of the package, although ESPN News will be included.
  • While MVPDs and programmers have been butting heads, the content of the TWC package may be the first indication that high-priced programmers – even Disney – are beginning to relent a bit, recognizing that with the current state of the economy, some subscribers can not sustain high cable bills.

Moffett commented: "The package represents an extraordinary compromise between content owners and distributors. The evidence is overwhelming that low-end subscribers are increasingly struggling to pay for the high-priced introductory cable packages. But any lower-priced, "lighter" package like TV Essentialscan only be offered with the cooperation and consent of content providers who are increasingly wedded to full distribution of all of their cable channels."

It may also be a sign that everybody is worried about cord-cutting. The ability to offer a lower-priced tier might help MVPDs retain low-end subscribers, Moffett noted.

As for TWC's package, specifically, he wrote: "We believe longer-term pricing is expected to be at the high end of that range. Still, this represents a substantial discount to existing introductory plans, roughly between today's Broadcast Basicpackages (ranging from $10 to $15) and fully Expanded Basicpackages (at around $50 to $60)."

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