Say talent, programming costs drive increases
WASHINGTON — In an effort to deflect some of the criticism for rising rates, cablers released a study Wednesday detailing the exploding cost of sports and entertainment programming, with a special emphasis on salaries of athletes and actors.
The National Cable Television Assn. report, released one day before NCTA president Decker Anstrom is scheduled to testify about rising rates at the Federal Communications Commission, attempts to draw a direct relationship between rising subscriber fees and exploding sports and movie rights fees.
Hollywood economics are at least in part to blame for cable’s soaring rates and the ensuing political backlash, according to the NCTA report. “Cable networks must not only operate within this environment of ever-spiraling costs for talent and hit product but face their own unique set of supply/demand forces,” says the report. Those unique circumstances include the “steady growth of competitors in the TV programming market.”
The report included a list of top Hollywood salaries including Arnold Schwarzenegger’s $25 million for “Batman & Robin” and Jim Carrey’s $20 million payday for “The Cable Guy.”
“If your fuel costs go up 60%, you can’t keep ticket prices at the same level,” said NCTA general counsel Dan Brenner, comparing hikes in programming fees to rising fuel costs for airlines.
Unlike airline carriers, which generally do not own their fuel suppliers, the cable industry is increasingly vertically integrated — owning both cable systems and the content. In many cases, including Time Warner, Comcast and Cablevision Systems, cable operators also own major urban sports teams.
But Brenner insisted that cable’s sports ownership is not significant enough to allow the industry to influence costs. “It isn’t as if football is owned by cable, or baseball is owned by cable or hockey is owned by cable,” said Brenner.
The report detailed the rapidly increasing cost of sports salaries, suggesting that they are a critical factor in rising cable rates. According to the report, average NFL salaries have increased 104% between 1994 and 1997 to $1.39 million. And average NBA salaries rose 26% in 1996 alone to $2.2 million. During the 1990s sports rights have risen 32%, to $1.77 billion a year, the report said.