Media companies benefit from higher network fees

Time Warner expects growth next year when rates increase on TV content distribution deals. At Comcast, revenue grew largely because distribution fees went up nearly 9 percent.

Mike Blake/Reuters

Time Warner expects growth next year when rates increase on TV content distribution deals. At Comcast, revenue grew largely because distribution fees went up nearly 9 percent.

NEW YORK — Media companies benefited from higher fees for cable television networks such as TBS, Comedy Central, and CNBC in the first three months of the year.

Time Warner Inc., Viacom Inc., and Comcast Corp. saw growth in their cable network businesses, thanks to distribution fees they charge cable and satellite TV service providers to carry their channels on subscribers’ lineups. Those rights fees get passed on to customers.


The boost in television helped make up for weakness at two of three movie studios that reported results Wednesday.

The trends show how important such fees have become to the television industry. Revenue at Time Warner’s television business grew, even with a decrease in ad revenue. Even broadcast networks such as CBS are increasingly relying on distribution fees to ride out fluctuations in the ad market.

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The fees have become so ­vital that broadcasters are worried about the threat posed by a Barry Diller-backed start-up called Aereo. The company sends over-the-air broadcasts over the Internet and bypasses traditional cable and satellite operators.

Time Warner, which owns channels such as TBS, TNT, and HBO, credited the television division for a 24 percent growth in first-quarter net income to $720 million, despite a tiny drop in revenue to $6.9 billion that resulted from declines at the Warner Bros. studio and Time Inc. magazine businesses.

Revenue at Time Warner’s television networks grew 3 percent to $3.7 billion. Network subscription revenue — which includes the distribution fees — grew 5 percent. Advertising revenue at the networks fell 1 percent despite higher ad rates.


Viacom’s media networks unit, which includes MTV, Comedy Central, and Nickelodeon, had a 2 percent revenue increase. Advertising rebounded as worldwide revenue grew 2 percent after a 6 percent decline the previous quarter.

The increases in television did not fully offset weakness at the Paramount Pictures movie studio, though. Viacom’s net income fell 18 percent in the fiscal second quarter, as revenue fell 6 percent to $3.1 billion.

At Comcast’s cable networks, revenue grew nearly 5 percent to $2.2 billion, largely because distribution fees went up nearly 9 percent.

Time Warner expects further growth in distribution revenue next year as the Turner channels — including TBS, TNT, and TruTV — benefit from new deals with higher rates.

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