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Tilted Cat Head
Administrator
Location: Manhattan, NY
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MSO (multiple system operator) is the industry lingo for Cable operators. They pay out a lot to companies like Viacom and Disney for carriage of their programming. Disney has one of the biggest advantages because they own ESPN and MSOs collect about $6 per sub, whereas they would collect about $.50 for MTV.
There's a lot of money at stake. It used to be that broadcast was competitive to free over the air for CBS/ABC/NBC/Fox but that's changed since most use cable instead of OTA.
Quote:
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MSOs are “immediately balking” at the $1.10 monthly per sub fee the Big Ten Network is seeking for carriage on analog, according to John Ourand in this week’s SPORTSBUSINESS JOURNAL. While ESPN gets $3.00 per sub, the fee the Big Ten Net is seeking is “significantly higher than other channels that have had trouble gaining distribution.” NFL Network charges around $0.70, and the planned MLB Channel will ask for about $0.25. The $1.10 fee is “comparable to many [RSNs], but cable operators are loath to pay it for a channel that has yet to launch and will not feature the best Big Ten games, which will be on ABC and ESPN.” Also, Fox Cable, which jointly owns the net along with the Big Ten Conference, has insisted that “every part of the eight states that make up the Big Ten schools be considered part of the local market.” For example, Philadelphia is nearly 200 miles from Penn State, but Fox is “demanding that Comcast put the Big Ten Network on its analog tier in Philadelphia” at $1.10 per sub. The net is seeking around $0.10 per sub from MSOs outside of Big Ten markets, and Fox Cable will “accept carriage on cable’s digital platforms” in those markets. DirecTV — which will carry the channel on its Total Choice package that has almost 16 million subs — is likely paying “much less than the rate Fox Cable wants in-market cable operators to pay” since DirecTV has one national feed that includes the 42 states that do not have Big Ten schools (SBJ, 4/16).
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This example above is how they are exploiting the market.
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