The latest attempt by video service providers to address the ongoing challenge of rising retransmission fees for local broadcast TV signals is the introduction of ‘Broadcast Fee’ line items on subscriber bills. These ‘below the line’ fees of $1.50 to as much as $4 are being introduced by video providers, large and small and follow a similar approach for the rising costs of regional sports networks. These rising fees have stimulated controversy and have stoked a debate regarding fairness and greed. So is this pricing trend more about recovering costs or trying to influence the debate? Maybe it’s both.
Depending on your perspective, retransmission fees are either unchecked rising programming costs championed by greedy broadcasters and their programming partners, or reasonable and justifiable fees to cover the rising costs of producing quality programming. Regardless of your position, there is no denying the rapid rise in these fees, which ultimately gets passed on to end consumers. Customers generally don’t like to see a steady rise in costs for any product, but that’s exactly what is happening with their monthly cable bill. Who do they blame and will they ultimately rebel is part of this debate.
Video service providers (VSPs) tend to get most of the blame for the rising costs and the blackouts that result from contentious retransmission negotiations. But is that a fair indictment? VSPs obviously would like to change that perception, and finger programmers, broadcasters, and sports leagues as the true culprit for rising cable bills. There are skeptics of course, including consumer advocate groups who argue that there is a cozy relationship between programmers and VSPs, both of whom are benefiting from the current arrangement.
By highlighting these rising costs with specific bill line items, VSPs are hoping to at least bring focus to the different costs of programming. Will it help in this debate, or will it potentially backfire with consumers, who will simply get annoyed at more line items that increase their bill?
It’s a conundrum to say the least and the smaller you are as a VSP, the more challenging it is. The real questions on everyone’s mind in this industry is how long are these rising costs sustainable and if they continue, will they ultimately ‘break’ the system, as consumers vote with their checkbook and opt for less expensive alternatives for video programming? Stay tuned.