Oprah’s Move to Cable All About the Big Money of Higher Carriage Fees
We’ve already written that Oprah’s cable network OWN which will launch next year was all about the big money of increased carriage fees, but it’s always good to see the carriage fee issue get some ink in the trade press. Carriage fees are the amounts the various networks are paid by the Comcasts, Time Warner’s DirecTV etc. per subscriber per month. It’s a huge portion of a cable network’s revenue stream. It’s said the average cable network makes half its money from carriage fees and half from advertising, but the networks with higher carriage fees sometimes make more than half their revenue from those subscriber fees.
Multichannel News writes that Discovery is being vocal that it expects OWN to fetch higher carriage fees. You should read it as pre-negotiating in public:
“We have a fantastic brand, and with Oprah behind us, we are looking to get more carriage for the channel and a different compensation structure over time,” [Discovery Communications CEO David] Zaslav said. “Over time, distribution will grow and we will get meaningful fees for high quality content.”
According to SNL Kagan, Discovery Health attracts carriage fees of about 12 cents per subscriber per month. It has been estimated that OWN could attract rates as high as 40 cents to 50 cents per subscriber.