Network TV costs cable companies a lot more than you might think.
Local affiliates of NBC, CBS, Fox, and ABC comprise a huge chunk of cable bills, allegedly accounting for as much as $16 of a cable bill, according to Cord Cutters News. As cable company woes have increased over the last decade, networks are still upping their prices. And cable company Armstrong announced this week that these fees have gone up a shocking 600% since 2006.
Part of the reason for these fee increases is an increase in competition. In addition to cable companies, streamers like Hulu, PlayStation Vue, and YouTube TV also want local channels.
Additionally, as same-day narrative viewership goes down, the value of live fare like sports, musical specials, and political events increases. This kind of content tends to live on networks. And in the case of live events like the NFL, these companies are paying top dollar for it. In turn, networks can charge more to cable companies.
The price hikes have led to some backlash. Sling TV, a cable competitor, has decided not to carry network television in order to keep subscriber costs low. Cable companies have also periodically accepted blackouts as they work out new contracts, much to the chagrin of sports fans. One blackout last year happened after a Seattle-based cable company faced an 80% price hike for the same service year over year.
Another tactic cable companies have adopted is including a “broadcast TV fee” in their cable bills to let customers know just how much of their bill comes from the big four networks. These fees have faced criticism because some companies have a habit of leaving them out of their advertised pricing.
Industry analysts agree this situation is unsustainable. Customers are canceling cable because of the high prices and networks continue to raise their fees as more competitors enter the market.
For the time being, this doesn’t seem to bother the big four. While the sky is falling around cable companies, ABC, NBC, CBS, and Fox seem set on making sure that whoever emerges from the streaming wars will still be paying big fees for their content.
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