In this era of pervasive communication, it's probably best not to crow about your gross margins in one place and expect that the information will be confined to the original audience. I've given quite a lot of airtime recently to the mounting anti-Malone insurrection in the Netherlands, which seems to have been sparked off by his recent interview with the Financial Times. Since this interview, which claimed that "in the Netherlands where cable TV is like a utility, we make a gross margin of 75 to 80%," the Dutch press has been nipping at Mr. Malone's ankles like a lot of angry little terriers (or being Dutch, extraordinarily tall terriers), and they show no sign of stopping. Today's Volkskrant contains another hit job, in which the reporter has done some digging into previous OPTA filings to come up with a ruling on pricing between Canal + and Multikabel (owned by Liberty) mandating a EUR0.11 per channel per month cost. Based on this, the reporter arrives at a monthly content cost per subscriber of EUR3.30, leaving readers to question why the average household is paying EUR15 per month for basic cable.
UPDATE: Another valued reader in the Netherlands sends me his observation that the print version of Volkskrant looked like this:
"On the frontpage, just below the name Volkskrant, there's blue banner with 18 points bold heading: 'Usurious profits for MSO's' and below, almost same size text): 'Cost to cable companies: 5 euro, Price for subscribers: 15 euro See page 7'
And on page 7 it's the opening, half page broadsheet, with a large color picture of some guy shoving cables in a duct."
Thursday, April 21, 2005
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