Most of the channels on television are owned by a handful of companies including ABC/Disney, CBS, Comcast/NBC Universal, Discovery, Fox, Time Warner Inc./Turner and Viacom. With few exceptions, these large media conglomerates will only sell their channels to cable and satellite companies like Mediacom in large bundles. This means in order to get the most popular channels, we are also forced to buy the least popular channels.
For more than a decade, Mediacom has been asking lawmakers in Washington to stop the bundling practices of the channel owners. Visit the Taking Action tab to learn more about how Mediacom is fighting on your behalf.
The threat of a blackout is an increasingly common negotiating tactic that channel owners use to force cable and satellite companies to pay unreasonable rate increases on during contract renewals. Many channel owners believe that by holding cable and satellite customers hostage they can extract a higher price for their product than if they relied on objective criteria to value their stations such as ratings, quality of content, etc.
There have been hundreds of broadcast station and TV network blackouts nationally over the last five years. Dish Network and DirecTV subscribers have experienced significantly more blackouts than Mediacom and its customers. Switching to a satellite provider will not protect you from the threat of a blackout. If you switch, you could find yourself in the same situation with your new TV provider, when its contracts with channel owners expire.
It’s our goal to provide you with a great programming lineup at a reasonable price. When the channel owners ask for more money, we negotiate with them in an effort to keep the costs you ultimately pay as low as possible. Many channel owners routinely demand 20%, 30%, 50%, or even higher increases during contract renewal negotiations even though ratings for their channels have dropped and/or their popular programs have been cancelled.
Much like your local gas station, Mediacom is the retail distributor of products that we purchase at wholesale. Just like the price of oil affects the price of gas at the pump, the price of cable and satellite television service is impacted by wholesale cost of the channels we carry. The fees we pay to retransmit local broadcast stations like ABC, CBS, FOX and NBC are by far our fastest growing wholesale cost component. The problem with sports programming is equally as alarming. Broadcast networks and national and regional sports networks are shelling out billions of dollars for the rights to carry televised sports like the NFL, NBA, MLB and NHL, the Olympic Games, World Cup and NCAA football and basketball games. Unrestrained spending has become the hallmark of the sports programming business, and the American consumer, whether a sports fan or not, is left to pay the price.
Contrary to public perception, cable and satellite companies are reluctant to raise video prices because when we do, we lose subscribers. Mediacom does not make more money when we raise video rates, since we remit virtually every penny of the increase on to the programmers. In fact, over the last three years, our programming cost increases were more than double our video revenue increases.
Even though over-the-air broadcast signals are free to viewers without a cable or satellite TV subscription, many broadcast station owners in recent years have started requiring cable and satellite companies to pay for the right to carry those same signals. Some station owner groups are particularly aggressive in seeking payments. The ever increasing amount of money that these groups take out of the pockets of American consumers is outrageous. As FCC Chairman, Tom Wheeler, noted, the cost of carrying local broadcasters “has skyrocketed from $28 million in 2005 to $2.4 billion in 2012, a nearly 8,600 percent increase in seven years.” A Wells Fargo analyst recently predicted this number could jump fivefold to $12 billion by 2019.
Mediacom would do that, but the individual TV stations have exclusive broadcasting rights over the affiliated network and syndicated programming they air in their markets. Under existing federal law, the owners can prevent Mediacom from replacing your local broadcast station with the signal of an out of market broadcast station. In short, local broadcast stations have been given monopoly power by the federal government and they use that power to squeeze more money out of cable and satellite customers and their customers.