FiOS forcing rethink on cable bundle fees?

There could be a major restructuring of cable carriage fees in store. The Wall Street Journal is reporting that Verizon is already in discussions with some channel owners about adjusting their fees to more accurately reflect viewing audiences to its FiOS digital service.

The argument is that some channels, and the WSJ specifically lists the Top 10 as far as viewing ratings are concerned, are paid too much based on those ratings. For example, the popular USA Network tops the list yet is  down at Number 8 in terms of the fee it receives (68 cents per home average says the WSJ). However, while few would argue that ESPN, which receives the highest carriage fee per home at $5.04, the Number 2 ‘highest fee’ channel is listed at ESPN’s 3D channel, which however worthy does not make the Top 10 in terms of ratings. Same with the Number 3 fee channel, 3net, which receives $1.29 per home per month, and also doesn’t show in the Top 10 rated channels.

Of course, few would doubt the value of ESPN or 3net to a viewer paying extra for their 3D services, but the argument becomes more dangerous for those channels in the middle tiers and usually bundled in the ‘basic’ fee package

The WSJ says that FiOS, with some 4.7 million subscribers, is now talking to channel owners about those fees and looking to avoid paying for channels that its chief programming negotiator, Terry Denning, says are not being viewed.

The story echoes other similar grumbles levied by Comcast and others over recent months. Viacom has also complained that even though its channels garner around 20 per cent of all viewing, it only receives around 7.4 per cent of total cable fees.

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