Cablevision warns of rising TV bundle prices

Wed Jan 6, 2010 8:08pm EST

* Cablevision CEO: rising prices could attract regulators

* Program makers risk being disrupted by new technology

NEW YORK Jan 6 (Reuters) - Cablevision Systems Corp (CVC.N) Chief Executive Jim Dolan warned on Wednesday that aggressive demands for fee increases by program makers would eventually lead to basic cable TV packages costing consumers more than $100 a month.

Subscribers of the the New York cable operator lost the Food Network and HGTV channels on Dec. 31, after it was unable to reach an agreement with Scripps Networks Interactive (SNI.N), who is asking Cablevision to pay more to carry the channels.

The Scripps-Cablevision dispute comes on the back of high profile negotiations between Time Warner Cable Inc (TWC.N) and News Corp's (NWSA.O) Fox Networks which also went to the wire on New Year's eve but got resolved in time to avoid a blackout of 13 million subscribers.

Dolan, speaking at a Citi investor conference in San Francisco, said if program makers demands are met it would eventually lead to large increases in customers' bills in the next five years.

"The bundle continues to get more and more costly to provide which is going to result in higher and higher fees to the customer base," said Dolan.

Dolan, whose company also owns cable networks like AMC and WE, said program makers should be careful not to follow in the steps of the music industry by allowing a cheaper disruptive technology or government intervention to undermine their overall business model.

"Are we going to see an $80 or $100 bundle basic service -- that's not completely out of the realm of possibility with the kind of acceleration we're seeing in fees," he said.

Cablevision currently charges around $56 for an expanded basic cable package it calls "Family Cable".

Cablevision has said Scripps is demanding $30 million a year for the right to carry the cable networks -- three times higher than their most recent agreement.

Both sides met again on Wednesday to try and work out a new deal. A Cablevision statement said that it had asked Scripps to return its programming to Cablevision's 3 million viewers but the company did not agree.

In the last year, talks between cable operators and program providers have become more tense. Programmers have been seeking better affiliate fees as they have seen advertising revenue hurt by the U.S. economic downturn and remain uncertain about the future of TV advertising as more marketers turn to the Web.

(Reporting by Yinka Adegoke; Editing Bernard Orr)

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