Disney caught in cable mousetrap

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Disney caught in cable mousetrap

Disney would see its TV distribution fees tumble by 65 percent, or $5.4  billion, if cable channel programming were based on customer loyalty, according  to an eye-opening report yesterday.

The Mouse House, which rings up $8.3 billion a year in program fees — roughly  26 percent of all such fees — would see that total drop to about $2.9 billion if  left solely to loyalty, the report said.

The report, by Lazard Capital analyst Barton Crockett, found that while  Disney gets high marks based on customer loyalty for ABC and ESPN, that it is  already more than well compensated for that enthusiasm.


Crockett undertook the research for the report after being shocked by  DirecTV’s agreement to pay struggling Viacom a 20 percent bump in fees — even  with weak ratings at Nickelodeon.

The analyst wanted to know what distributors would pay if it were based on  customers’ loyalty.

Crockett’s report also suggests CBS and Discovery would benefit the most if  distributors looked at loyalty rather than ratings.

The report asked consumers if they lost a channel from their package, what  would make them willing to switch.

Surprisingly, Discovery Channel came second behind ESPN in cable. CBS came  tops in broadcast.

The report contradicts conventional wisdom that programmers’ push for more  cash from distributors will force price increases on the consumer and ultimately  turn them into cord-cutters.

Still Crockett believes there “could be some reallocation [of distributors’ programming budgets] in times of stress.”

Crockett’s report comes at a time when distributor- programmer battles are  causing blackout havoc, and as lawmakers look into changing the Cable Act, which  governs such talks.

 

Disney caught in cable mousetrap

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