An Overview of the Economics of the TV Business
The cost of programming is significant and dramatically increasing.
Your TV bill is primarily driven by two cost buckets: 1) the cost to provide service and 2) the fees we pay to cable networks and broadcast stations.
Cost to Provide Service
This includes installation costs, maintaining and upgrading our network infrastructure, equipment, employee costs and normal expenses common to every business.
Your monthly bill allows us to build a better network to provide faster internet, advanced products such as TV Everywhere, thousands of hours of free Video On Demand content and much more. Frontier has invested millions of dollars to provide advanced services like voice, video, phone, data and security. And Frontier doesn’t stop there. We have our eye on the future by investing in the latest technology to bring you the most innovative products, services and support.
Frontier and all other TV providers pay each network and TV station owner a fee for every household that receives their programming – regardless whether anyone in the household watches the channel.
Networks make money in three ways: By charging Frontier a per household fee, by selling advertising, and by licensing their shows to services like Netflix or other cable networks. Since advertising revenue can go up and down, broadcast and cable networks are shifting more of their revenue burden to programming fees, which directly impact your bill.
What is the difference between a broadcaster and a cable network?
A national broadcaster, such as ABC, CBS, CW, FOX and NBC, provide their networks nationwide through a combination of owned and affiliated local TV stations. These local broadcast stations use public airways to distribute their programming free over-the-air to households with antennas. They also negotiate with TV providers to deliver their programming to their customers.
Retransmission Consent is a provision of the 1992 Cable Act that requires Frontier to obtain permission, or "consent," from each of the stations in order to add the channel to your viewing lineup. This law states that Frontier (and other service providers) must negotiate a fee arrangement with station owners who opt for retransmission consent in order for Frontier to carry a local broadcast station. Station owners may alternatively opt for “Must Carry” which means they forgo fees and instead get guaranteed carriage in a provider’s lineup. Those stations that opt for “Must Carry” are generally low-rated and see more advantage to guaranteed carriage.
A cable network negotiates with TV providers to carry their network(s) for a fee per customer per month. Unlike broadcast TV stations, cable networks do not use the public airwaves for distribution.