Time Warner Cable has introduced a $99 “triple play” of TV, Internet and voice services in New York City that excludes some big names of basic-cable programming, such as ESPN, FX and Court TV.
And the excluded programmers feel that this means of attracting new customers is a backhanded way for the cable giant to, in effect, place some of the more expensive basic-cable networks such as ESPN on a tier.
Time Warner Cable corporate spokesman Mark Harrad said the promotion was created by its New York division, and there are no plans to expand it into the MSO’s other markets. He added that the type of promotion in the New York market has been used by several other cable operators and direct-broadcast satellite companies to attract new customers.
According to the Time Warner Cable offer, New York City and Hudson Valley region (Sullivan, Orange, Ulster, Dutchess, Greene and Delaware counties in New York) customers can receive 150 digital-cable channels, high-speed-Internet service at 384 kilobits per second downstream and digital-telephone service for $99 per month for one year. After the expiration of a promotional period, the monthly price rises to $104.
But what has some programmers up in arms is the digital-cable offering -- called the “DTV Intro Package” -- that offers 150 channels of programming minus basic-cable staples like ESPN, Madison Square Garden Network, Court TV, Bravo, FSN New York, FX and Yankees Entertainment & Sports Network.
ESPN is arguably one of the more costly networks for operators, charging MSOs roughly $2.50 per month, per subscriber for the service. Operators have long wanted to place the sports network on a tier, but ESPN has resisted, mainly because it receives more advertising revenue when it is on the more widely distributed basic tier.
Pali Research media and entertainment analyst Richard Greenfield -- who highlighted the Time Warner Cable promotion in a recent research report -- said ESPN could lose as much as 5%-10% of its subscriber base in New York City as a result of the promotion. Given that Time Warner Cable has about 1 million subscribers in Manhattan, this could translate into $1.5 million-$3 million in lost annual-carriage-fee revenue alone.
Greenfield said last week that the exclusion of those networks could have broad implications for the rest of the cable industry. While Time Warner Cable is technically not violating any carriage agreements with the programmers because they are still carried on its widest available tier, if other operators followed suit, it could represent a significant revenue impact to the networks.
ESPN spokeswoman Catherine Brett said that the network was in discussions with Time Warner Cable about the offering. She declined further comment. A spokesman for YES also declined comment. Officials at FX parent Fox Cable Network Group and Bravo parent NBC Universal did not return calls for comment.
For more on Time Warner Cable’s DTV Intro Package in New York City, please see Mike Farrell’s and Linda Haugsted’s story on page six of Monday’s issue of Multichannel News.
