Socialized Football

footballTime Warner Austin and The NFL Network are battling like two burly tackles over televised football. Time Warner has pulled the NFL Network from their cable lineup. The NFL and football fans are furious, and the Texas legislature has been dragged into the melee. The NFL wants back on the air, of course, but if they get their way it will be bad news for everybody—including football fans.

The American cable market is structured as a basic subscription service, and the subscriber adds the premium content they want with extra-cost packages. The NFL Network is premium content, but the NFL wants to push it into the basic service package. That way they can collect fees for every single cable subscriber in the system—not just those who want an extra football channel.

Time Warner is opposed to this because they will have to either boost cable rates or take a cut in revenue. Their counterproposal is to add a premium channel that people could subscribe to, let the NFL set the price, and give the NFL all of the money collected. Time Warner likes that because it preserves their revenue and channel lineup—even if it won't make them any money.

If the NFL wins, people who don't care about football will be subsidizing premium content for football fans. No thanks; Texas doesn't need socialized football.

What's worse, if the NFL wins, the other premium content providers are going to line up for the same deal. Expect an explosive increase in basic cable fees.

What Time Warner proposes, on the other hand, is exactly the way cable should be: you should be able to pick and choose exactly which premium channels you get and pay just for those. That's called a la carte pricing. Consumer groups have been pushing for this for years. The cable industry has been solidly opposed, because they'd rather sell you a higher-priced bundle.

This time around, however, Time Warner saw the light and went a la carte for football. I think that's great. I hope it works so well that Time Warner realizes they should give cable subscribers what they really want: a la carte all the way.

9:40pm update: I posted a pointer to this article over at the Austin Cable Yahoo Group. Barry mentioned he'd heard $0.80/subscriber as what the NFL wants, which indeed adds up to a tidy sum.

I did some research to confirm that, and indeed it seems to be true. I found an article in the Milwaukee Journal Sentinel that said:

According to one report, the three-year-old NFL Network wants to be put on basic cable tiers at $0.70 per subscriber a month. Another report pegs it at $0.80 per subscriber.

Time Warner and Cablevision are prepared to offer something around $0.25 a subscription. The sides are stalemated.

Here is the full article: Bad news for some Packers fans


Comments have been closed for this entry.

Finally - a clear explanation

Thanks for the concise analysis. I totally agree with you. Given that Time Warner has many channels that are available on demand, I could have easily subscribed to only watch the Cowboys versus Packers game.

I personally have no desire to watch the Arizona Fudgepackers versus the Minnesota Gamecocks or any of the other teams, nor do I give a tinkers darn about basketball, baseball, hockey or any other pansy ass sport where the players have gone on strike.

Let's hope the Legislature stays away from this and lets free commerce take its course. Given Governor Pretty Hair agendas I'm sure a bill that attempts to legislate cable channels will be vetoed.

NFL Network

To my knowledge, Time Warner Austin has never carried the NFL network. Also, Time Warner Austin has never had a problem raising my rates arbitrarily in the past. Their stated reason of not wanting to raise their customers' rates is laughable. The real sticking point for them is the exclusive contract the NFL has with Direct TV for their "Sunday Ticket" package.

Anonymous is wrong

The Time-Warner objection was that they offered both to have NFL a-la-carte and on a sports tier, and the NFL said no to anything-but-basic, and their price is very high for a channel with one football game per week and a bunch of filler (i.e. not remotely as attractive as a multi-sports channel like ESPN).