Small cable networks could get pushed into deals

Small independent cable networks could be forced to sell themselves to larger media conglomerates in the next 12 months as their profits are squeezed by pay TV operators looking to cut programming costs.

The lifeblood of networks are the fees that cable, phone and satellite operators pay for the right to televise their programs. Such programming fees are often the largest costs to the operators. Programming costs are expected to rise 7 percent this year due to pressure from large media groups that own broadcast networks. These media titans -- Walt Disney Co, News Corp, NBC Universal -- are demanding cash for the right to carry the big broadcast networks, ABC, CBS, Fox and NBC. Standalone cable networks, such as Outdoor Channel, Hallmark Channel or even a mid-sized group like Scripps Networks, are likely to suffer because they lack the leverage of Walt Disney, which can negotiate higher fees for its cable networks in tandem with the threat that it will withhold its ABC network from an operator's subscribers.