Is Time Warner to Blame?

Today the Big Ten Network announced that Verizon’s FiOS TV will be carrying the network. Coupled with the recent announcement of three Ohio State games being broadcast on the Big Ten Network (Youngstown State, Troy, and undetermined conference game) new fuel has been thrown on this fiery topic. And, whenever I think of this debate, I want to take Time Warner’s side.

Before you declare that you will never read this blog again, hear me out. Time Warner did not ask for the Big Ten Network, yet it is being unnecessarily vilified because many perceive it as the lone impediment stopping a predestined love affair between the BTN and fans. Forgetting for a second that the fans are the ones that ultimately suffer during this squabble, let’s take a look at the circumstances and assess the situation.

As you know, the nascent BTN has been embroiled in a battle with cable companies (mainly Time Warner) ever since the network began broadcasting in 2007. The problem? The BTN currently wants to charge the cable companies about $.80 per subscriber/month in order to show the network (down from an initial $1.10). For comparison’s sake, this data shows CNN recently making approximately $.45 per subscriber/month, with Fox News making approximately $.30 per subscriber/month. Is the BTN worth twice as much as those cable networks? In addition, the eight state region containing the Big Ten schools is being unduly punished, as the price charged per subscriber/month by the BTN is as low as $.10 in the remaining U.S.

Here’s the rub. The BTN wants the highest number of cable subscribers to be “subscribing” to their channel so they make the most possible money. That means the cable providers have to increase their basic rates to cover the per monthly subscriber fee to the BTN and the rest of the attendant costs. That means basic rates go up for everyone, even those that could not care less about the network. Of course, they can simply absorb the costs and makes less profit. Which one would you choose?

On the other hand, Time Warner wants to place the BTN on a sports tier typically designed for niche sports programming. Therefore, the subscribers who want it will pay for it, and Time Warner will not have to raise everyone’s rates. Everybody wins, right?

Nope. The BTN balks at this suggestion because that would drastically lower the total number of subscribers receiving the network, thus lowering their revenues based on subscribership. Also, the BTN does not believe it is a niche network despite the fact that the price in Big Ten country is 800% than other places (irony anyone). Their argument is that their viewership is instantly large enough to be considered on basic cable, and that the cable companies’ stubbornness is effectively blocking fans that want the network from watching it.

So who’s right? At first glance, it is easy to say the cable companies are being overly greedy, making a fortune off of subscribers willing to pay a premium for these specialized channels (which, as we said, is usually done so the cable companies can keep their basic rates low). The Big Ten Network knows that the cable companies are extremely profitable, and they believe they deserve a piece of the pie because they have a product in demand.

But I cannot help wanting to take Time Warner’s side in this one. They already pay ESPN $3.00 per subscriber/month and you have to figure that price includes ESPN’s negotiations to broadcast Big Ten football and basketball games. ESPN is not going to lower their fee, so essentially Time Warner is being asked to pay twice for the same content.

I understand that we already have precious few Ohio State Saturdays and that people are mad, but it is hard for me to lay all the blame at Time Warner’s feet.