Cox Communications Inc., one of the nation's oldest cable companies, is taking aim at so-called most-favored nation clauses that are commonplace between large pay-TV distributors and programmers.
Typically, a big pay-TV distributor such as Comcast Corp., which has about 23 million subscribers, or DirecTV, which has around 20 million customers, is able to negotiate a volume discount to carry expensive cable channels such as ESPN or TNT.
The problem, says Cox, is that the volume discounts the big distributors get puts an unfair burden on mid-size and smaller operators and their subscribers. Programmers, Cox said, try to make up for the lost revenue by charging smaller distributors more, even though those companies do not have the deep pockets that the bigger companies have.
"As programming costs are shifted disproportionately to mid-sized and small multichannel video program distributors (MVPD), their customers are disadvantaged as higher costs make it more challenging for these MVPDs to develop the innovative services at competitive prices necessary to meet the offerings provided by the largest providers," Cox told the Federal Communications Commission last week.