Cable networks flying high for conglomerates

At Time warner, Walt Disney, NBC Universal, Cablevision, Scripps, Viacom, and News Corp, cable networks were their companies' biggest cash cows in the second quarter, a trend that will only become magnified in the years to come.

While advertising climates change depending on the economy, fees paid to these companies by cable, satellite and fiber video providers (known as affiliate fees) are much more predictable. "The affiliate fees have good growth characteristics and good visibility going forward," said David Bank, an analyst at RBC Capital Markets. "And on the advertising side, I think cable will continue to gain share from broadcast. When you add those two things together, you have a pretty good secular profile."

Disney, NBC Universal, Viacom and News own television production studios that provide much of their programming. Disney, NBCU and News Corp. also own three of the Big Four broadcast networks. Not only have they been able to charge higher fees to video providers for their cable networks, but each is increasingly determined to get cash compensation for the right to retransmit the signals of broadcast network stations in most of the nation's biggest markets. While all of this adds up to a bonanza for the largest media conglomerates, it has set the stage for contentiousness.