I have wondered about subscribing to Sling (owned by Dish), Philo (it says on the Wiki page it has investors from different entertainment companies but a private company), Hulu Plus Live (owned by Disney, but contains stations from WBD, NBC, Paramount, Fox, ect.) Say I choose Hulu, do I pay Disney directly $95, or does the money get split among each station owner?
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Economics of cable/live streaming services--where does the money go?
- Thread starter tall_guy1
- Start date
I think you've asked this same basic question before. It's the same answer: The company you deal with, whether that is Hulu or Philo or Comcast, with pays a wholesale price for each of the channels in their bundle.
The wholesale price is what is being argued over when the companies have a spat like Disney and DirecTV had earlier this month.
The wholesale price is what is being argued over when the companies have a spat like Disney and DirecTV had earlier this month.
So they pay the networks for the channels and we pay the company a (slightly) higher fee so they profit?
What station owner? Are you talking about program providers, cable/satellite systems, or call letter TV stations? You don't seem to understand the terminology.
I believe he wants to know how is the money split up. Profit margins etc. This could be difficult to figure considering with companies like Comcast who have studios, OTA network and stations (NBC), cable networks, Peacock, cable and internet home an business service.
I mean Disney stations, Warner Brothers stations, Fox News, Fox Sports, NBC Universal, ect. and their share of cable/live streaming revenue. If someone were to pay Dish, would that money go directly to NBCUniversal and the other companies who own stations?
Disney TV stations are owned and operated by ABC Television division. Those call letter stations are considered Owned and Operated (O&O's). The actual stations are just a small portion of Disney's overall media portfolio. Those local O&O stations negotiate retransmission agreements with local cable providers based on a number of subscribers (paying customers) in that market on a particular cable system. ABC network affiliated stations not owned by ABC, pay ABC/Disney for the ABC-provided programming and negotiate their retrans with cable providers separately. There could be what amount to 'escalator clauses' in the affiliate contract with ABC for a local station to account for increases in retrans fees that an affiliate station collects from cable companies.
WB doesn't own call letter TV stations like NBCU or ABC/Disney. Stations or station groups purchase programming from WB.
Fox News is a cable channel. Newscorp is Fox News' parent company. Fox News gets most of its income by selling the programming directly to cable providers. (Comcast, Charter, DirecTV, Dish, etc.) Newscorp requires cable providers to include Fox Business if they want to carry Fox News.
Fox Sports is a division of Fox Broadcasting but has cable-only channels in the form of FS1 and FS2. Fox Broadcasting is an O&O and has a similar business structure as ABC above when it comes to call letter TV stations and money made from retrans.
NBCU has a similar structure to ABC/Disney, including similar business divisions including theme parks, broadcast (O&O's known as 'NBC-Local') Olympics division, NBC Sports, NBC News, Universal Studios, Music Licensing, Peacock/streaming, and various cable networks like Bravo, SciFi, etc.
In the case of NBC O&O stations, 'NBC Local' negotiates retrans with cable companies in all markets. Like ABC/Disney, affiliate stations not owned by NBCU negotiate retrans with their local stations independently of NBC Local, because NBCU doesn't see any money directly.
I'm not sure why you seem to be having so much difficulty with this concept. It's the same thing for any programming aggregator, whether it's a traditional cable company or a streamer like YTTV, DirecTV stream, or Hulu + Live TV.
You make one monthly payment (for me it's $75 to YTTV). Some of that is used by YTTV itself to pay for the cost of providing all of its own infrastructure (its apps and software, its bandwidth for streaming, its internal technology for delivering local-into-local stations). Some of that gets paid out to the providers of all the programming YTTV delivers, and I think that's what you're asking about. What's left is profit to YTTV and its owner, Google. (YTTV also makes some money by selling some of its own ads during the availabilities offered by cable networks.)
As for how that money is actually paid out to each program provider, it's on a wholesale basis. YTTV strikes deals on a regular basis with each supplier of programming to get the rights to deliver that programming to its customers, and the exact details of those deals aren't made public.
We can guess at some of them - we know the ESPN suite of channels is always the most expensive, and the generally accepted number for that is around 9 dollars a month. Your local stations, if they're network affiliates, probably get a couple of dollars each per month, depending how aggressive their owners are in negotiating. Smaller standalone networks might get only a few cents, or might even offer free carriage just so they can get more eyeballs on the ads or products they sell. Home shopping networks often provide payment TO the cable or streaming company based on how much they sell through that outlet.
What I don't understand is your question about "paying directly." That's not how it works. You make one payment a month to your cable or streaming provider and you don't know exactly how it's divided up internally. There's no payment where DirecTV sends WBD a specific check for $4.26 (or whatever) each month and says "this is for tallguy81's subscription."
It's a wholesale system - if DirecTV has 10 million streaming subscribers and the deal they have with WBD is for $4.26 a month, then there's a lump payment from DirecTV to WBD for $42.6 million a month to carry its programming (these are just hypothetical numbers, of course, and there are likely all kinds of bulk discounts and other adjustments!)
And yes, these payments apply even for divisions of the same company. If I am on an Xfinity cable system, there's still a negotiation for how much Xfinity pays internally to carry Comcast-owned channels like CNBC, and there's still a wholesale payment being made from one arm of the company to the other.
Does that get closer to answering your question?
You make one monthly payment (for me it's $75 to YTTV). Some of that is used by YTTV itself to pay for the cost of providing all of its own infrastructure (its apps and software, its bandwidth for streaming, its internal technology for delivering local-into-local stations). Some of that gets paid out to the providers of all the programming YTTV delivers, and I think that's what you're asking about. What's left is profit to YTTV and its owner, Google. (YTTV also makes some money by selling some of its own ads during the availabilities offered by cable networks.)
As for how that money is actually paid out to each program provider, it's on a wholesale basis. YTTV strikes deals on a regular basis with each supplier of programming to get the rights to deliver that programming to its customers, and the exact details of those deals aren't made public.
We can guess at some of them - we know the ESPN suite of channels is always the most expensive, and the generally accepted number for that is around 9 dollars a month. Your local stations, if they're network affiliates, probably get a couple of dollars each per month, depending how aggressive their owners are in negotiating. Smaller standalone networks might get only a few cents, or might even offer free carriage just so they can get more eyeballs on the ads or products they sell. Home shopping networks often provide payment TO the cable or streaming company based on how much they sell through that outlet.
What I don't understand is your question about "paying directly." That's not how it works. You make one payment a month to your cable or streaming provider and you don't know exactly how it's divided up internally. There's no payment where DirecTV sends WBD a specific check for $4.26 (or whatever) each month and says "this is for tallguy81's subscription."
It's a wholesale system - if DirecTV has 10 million streaming subscribers and the deal they have with WBD is for $4.26 a month, then there's a lump payment from DirecTV to WBD for $42.6 million a month to carry its programming (these are just hypothetical numbers, of course, and there are likely all kinds of bulk discounts and other adjustments!)
And yes, these payments apply even for divisions of the same company. If I am on an Xfinity cable system, there's still a negotiation for how much Xfinity pays internally to carry Comcast-owned channels like CNBC, and there's still a wholesale payment being made from one arm of the company to the other.
Does that get closer to answering your question?
And just so we don't keep getting stuck on this between Kelly and the universe: it's not THAT hard to figure out that when tallguy is saying "stations," he's referring to what the industry would call "networks," whether it's CNN or Disney Channel or Bravo or what have you.
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