NYC Prepares for Life After Cable TV
24th September 2010
Time Warner Cable and Cablevision pay the city 5% of revenue from all cable subscriptions sold to residents in exchange for the right to run their wires along city streets. With 1.9 million households paying for cable, the deal generates about $110 million for the city each year, according to Bruce Regal, a senior lawyer at the city Law Department and one of the negotiators working on the new cable contract.
So the new deal with Time Warner Cable and Cablevision contains something different: an escape clause for the city. If fees from cable-TV sales drop more than 22.5% as consumers shift to Internet video, the ten-year contract will be terminated and the city will be free to renegotiate the terms. The provision is the first of its kind in a municipal contract with cable companies, city officials said.
Replacing the cable-subscription fees would prove tricky, as the 5% regime is enshrined in federal regulations that expressly prohibit cities from collecting fees on other products sold by cable companies, such as Internet and telephone services. But city officials believe a ruling by a court or the Federal Communications Commission might alter the existing regulations if and when consumers begin cutting the cord.