Funny how the prices that Big Media companies charge for their pay TV channels rarely have much to do with the consideration that really matters: How many people actually watch? That’s what makes Verizon‘s new effort to link payments with audience levels, which The Wall Street Journal disclosed this morning, so intriguing — but also such a long-shot. The company’s FiOS TV unit wants to base the fees it pays channels on the number of households where someone tunes in for at least five minutes a month. That wouldn’t necessarily reduce subscribers’ bills, Verizon’s top programming negotiator Terry Denson tells the paper. It would simply help to “stabilize retail prices” by rewarding channels when they attract additional viewers. But Denson acknowledges that it will be hard to persuade programmers to abandon their business models which are built on the presumption that they should extract fees from all subscribers including those who never watch their channels. He says that his talks with owners of small and midsized networks are just “inching forward” and he hasn’t broached the idea with Big Media companies that dominate TV programming.
Smart man. When you see the enormous disparity in the amounts networks make for each viewer, it’s easy to see why some of the industry’s most powerful programmers would do anything they can to prevent a move to tie pay to performance. On average, the providers of the 68 biggest channels make $1,724 a year from each viewer according to data that Barclays Research released last week. But the most powerful Big Media companies including Disney, Comcast’s NBCUniversal, and News Corp dominate the channels generating the highest per-viewer returns. Sports channels on average receive a whopping $8,351, including ESPN’s $11,461, Golf Channel’s $10,739, and NBC Sports Network’s $6,315. And news channels average $4,676 with CNBC’s $7,883, CNN’s $5,335 and Fox News’ $4,043. (MSNBC is way behind at $1,444 although that should substantially improve in NBCUniversal’s next round of affiliate contract negotiations.) Without these cash machines in the mix, it’s hard to see Verizon making headway offering riskier terms to the owners of pay TV’s biggest bargains including Investigation Discovery (which makes $273 from each viewer), Hallmark Channel ($383), and Cartoon Network ($461).
- FiOS TV