Carriage costs complex, says Comcast CFO

Angelakis says new services, not just content costs, spur price increases

Comcast CFO Michael Angelakis said Wednesday that new services, not just programming costs, add significantly to the price of renewing carriage deals.

“You’re asking for more rights,” he told investors at the Goldman Sachs Communacopia conference. “Ten years ago, it was a linear feed. Five years ago, it was a linear feed plus VOD. Now it’s VOD, SVOD, in-home, out-of-home, tablets, smartphones. It goes on and on.”

Deals therefore take longer and pricetags rise, Angelakis said, adding some texture to carriage negotiations across the biz that have become increasingly testy and have been grabbing headlines in recent months.

“It’s hard to match those costs and provide the services,” he said.

Comcast has added video subscribers year-over-year for nine quarters running, Angelakis said, and it’s been adding broadband subs for even longer thanks to heavy investment across the business from boxes and content to guides and marketing. The company’s goal is to boost homes passed from the current 42% for video, 36% for highspeed and 18% for voice services.

Discovery Communications CFO Andy Warren said at Wednesday’s conference that expanding carriage for developing networks like ID, Science, Military Channel and the Hub is a priority in new pacts although it doesn’t show up in rate increases. He stuck a more conciliatory tone, publicly at least, than other programmers have.

“One great asset Discovery has is its relationship with its affiliates,” he said at the Goldman confab.

About 20% of Discovery’s affiliate contracts mature this year, with the rest staggered over the next five years. All the networks “come up at once so it gives us heft,” Warren said. “We’re looking for a collaborative win-win approach.”

Discovery hasn’t done a TV Everywhere deal yet, but Warren said the company will tackle that within broader affiliate discussions. “I don’t see us carving out (separate) TV Everywhere rights,” he said.

Angelakis said 5 million Comcast subscribers are using TV Everywhere service, and that the Summer Olympics on NBC were a “game changer.”

Asked about OWN, the 20-month-old venture with Oprah Winfrey, Warren said, “We couldn’t be happier.” Ratings have picked up, and it’s “right on track with our expectations” to be cash-flow neutral in 2013.

At a media conference last week, broadcast network execs had signaled uneven advertising Stateside, but Warren said he hasn’t seen it and called the market “robust.” Western Europe is choppy, however, he said.

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