Stepping up the fight over cable-programming costs, ESPN chairman George Bodenhemier blasted Cox Communications Inc., laying the blame for rising cable bills on cable operators’ spending for system improvements rather than rising programming costs.
In a presentation held in Washington, D.C., and aimed squarely at Congress, Bodenhemier said Cox "continues to grossly overstate" the effects of ESPN’s license fee, which has been rising 20% annually.
"Cox’s effort to blame ESPN for its retail-pricing decisions is just plain wrong," Bodenheimer said. "For Cox, this is contract-negotiation rhetoric directed solely at improving its already-healthy and growing 35% [profit] margin business."
ESPN hired an economist to analyze where a cable subscriber’s $40 or so basic-cable payment goes. The conclusion: mostly interest expenses and capital improvements, and not license fees for basic programming.
"The primary driver of cable operators’ costs is the investment they’ve made in new infrastructure and services," Bodenheimer said.
In an interview, Cox president Jim Robbins responded that the analysis is simpler: A stiff annual increase in ESPN’s license fees is unreasonable.
"ESPN's 20% increases are disproportionate to the economic reality of the world today," Robbins said. "The rapid and unrestrained rise of sports-programming costs is threatening the value of cable television for American consumers."