Fox goes dark on Cablevision [Multichannel News]
In the wee hours of the night, 3 million Cablevision customers in Metro New York lost Fox owned Channels 5 and 9, Fox Business, NatGeo Wild, and Fox Desportes. The channels were pulled off the cable system by News Corporation, Fox's owner.
This was a completely predictable situation. Fox is asking Cablevision to double the total fees they pay for their networks. Fox points out that they are only asking Cablevision to pay what others have agreed to pay.
Why was this so predictable?
Because of the timing. The Phillies are playing the Giants tonight in the National League playoffs, on the road to the World Series where New Yorkers hope to see the Yankees. The National League championship games and the World Series are on Fox this year. And let's not forget the Fox coverage of the National Conference NFL games -- tomorrow the NY Giants are playing the Detroit Lions.
I wrote earlier this week that having exclusive rights to these types of events results in monopoly power in the marketplace. In response to that, someone posted the following comment to that article first quoting my post and then, succinctly offering his or her reaction to my view:
"When a single [network] has the exclusive rights to extremely high-demand product, the laws of monopoly come into play."Many people believe what this person believes -- that cable operators have monopoly power. But we don't.
In some markets, where there is no wireline competition, there still are alternative suppliers for every service we provide including video, telephone and Broadband services. You may prefer to purchase them in a package from one company like us, but that does not give us the type of monopoly power that I am talking about. Having exclusive rights to the World Series and other highly-desired events like the Super Bowl and the Academy Awards is a monopoly in the truest sense.
Cablevision customers can now choose between DirectTV, Dish, and Verizon as an alternative to Cablevision if they don't like their current distributor. Even with that exposure, imagine how desperate Cablevision feels about controlling the spiraling cost of programming, particularly sports, which I also have written about many times.
I never like to see the government get involved in commerical activities when the marketplace is working.
In this case, it's not.
I appreciate carriers like Cablevision standing up to Fox and standing up for consumers' rights. Why not carry this further and offer cable users the right to decide whether they want to receive channels such as FOX Sports and ESPN? Seems to me that this would lift some of the burden from the cable and satellite operators, as ultimately it would lead to the content providers asking the consumers to subscribe to their content. (It also saves people like me some money since I really don't watch that much sports and have no use for Fox or the drama that NewsCorp tends to cause.)
Posted by: Roger Chui | Monday, October 18, 2010 at 06:20 PM