Cable One faces uphill battle with Turner over channels, cost
by Patrick McCreless
Oct 10, 2013 | 8200 views |  0 comments | 46 46 recommendations | email to a friend | print
Children play inside Pediatrics Plus in Anniston as the TV above them shows a cartoon. Photo by Stephen Gross.
Children play inside Pediatrics Plus in Anniston as the TV above them shows a cartoon. Photo by Stephen Gross.
Cable One’s recent loss of several entertainment and news channels will likely be temporary, but cable rates might rise once the blackout ends, some telecommunication experts say.

More than a week has passed since about 24,000 Calhoun County subscribers – along with the rest of Cable One’s 730,000 customers in 19 states – lost several Turner Broadcasting System channels due to a contract dispute between the two companies.

Michael Corty, telecommunications analyst for Morningstar, a Chicago-based investment research firm, said such disputes over programming rates have increased in recent years.

"Typically, these things last a while and then get resolved," Corty said. "From my general understanding, they're going to pay the increased fee."

The battle over rising rates for programming is part of a growing number of disputes between cable distributors and broadcasting networks across the country as the market faces greater competition. Some industry experts say smaller distributors like Cable One have little leverage in such fights, forcing them to usually pay the higher rates demanded by networks to end such disputes. The cable companies may pass those costs onto customers, experts say.

Last week Cable One customers lost Turner-owned channels including CNN, CNN en Espanol, Headline News, TBS, TNT, Cartoon Network, Turner Classic Movies, TruTV and Boomerang.

The blackout occurred when Cable One decided against paying higher rates for the channels after several months of negotiations with Turner. According to a Cable One press release, Turner requested a nearly 50 percent price increase for the channels, many of which, the cable company said, have declining ratings. Cable One has since begun broadcasting commercials about the dispute, saying it's fighting to save money for customers.

Corty said that smaller cable companies like Cable One usually don't have much leverage in fighting rate hikes due to the popularity of most television programming.

"The larger you are ... if you have more customers, that helps," Corty said. "Typically the prices get pushed through, but Cable One has got to decide."

Attempts to reach a Cable One representative today were unsuccessful.

Rachelle Savoia, spokeswoman for Turner, said she could not comment on what is currently going on between her company and Cable One.

Turner released a statement last week, saying, "We are simply asking that Cable One pay the established and accepted rates already in the marketplace ... and remain willing to discuss a new agreement."

Georgia-based telecommunications analyst Jeff Kagan said cable companies like Cable One are trying to manage costs due to increased competition in recent years from Internet subscription services like Netflix and Hulu.

"The economy is weak and prices are out of sight, but now all of a sudden there is choice and customers are going elsewhere," Kagan said.

Kagan said many customers want to pick and choose the channels they get from cable companies, but the industry has been unwilling to offer that option.

"If they continue down this course, the cable industry will hurt itself," Kagan said.

Chase Thomas, owner of Pediatrics Plus in Anniston, said he switched from cable television service years ago and instead uses Netflix to show cartoons in his waiting room.

"When I worked in Birmingham a few years ago, the cable rates kept going up," Thomas said. "When I got here I switched to Netflix and just put movies on ... it's a way to keep costs down."

Ted Hearn, vice president of communications for the American Cable Association, agreed with Corty that smaller companies like Cable One face an uphill battle in countering rising rates. The ACA is a Pittsburgh-based trade association that represents 850 smaller and medium-sized independent cable companies, including Cable One.

"Media consolidation is not a friend to independent cable operators," Hearn said. "It levies enormous economic leverage over small cable operators, driving cable bills and stuffing channels with unwanted programming."

Hearn said more programming rate disputes are increasing across the country because networks are constantly raising rates.

"Small, independent cable operators are trying to keep the price of cable reasonable, but programmers are being totally unreasonable," Hearn said.

In any case, Cable One will probably make some sort of deal with Turner once it believes it has made its point, Kagan said.

"This is all a public-relations effort to let customers know they're on the customers' side," Kagan said.

Staff writer Patrick McCreless: 256-235-3561. On Twitter @PMcCreless_Star.

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