This past week Time Warner Cable came close to dropping the Fox Network from its system due to a dispute concerning retransmission fees. In case you aren’t aware, cable companies like Time Warner and Comcast often pay cable programmers (at least those that opt out of must-carry regulation) for transmitting their channels on their systems. Also known as carriage fees, retransmission fees have become more important to networks given the recent drop in advertising. Fox had been asking for $1 per subscriber while Time Warner was offering only $0.30. SNL Kagan believes that they settled at $0.50 with a likely “increase over the life of the new agreement.”

Since most networks receive less than $0.50 per subscriber Fox’s deal seems pretty good. However once Fox’s large audience is accounted for, it seems that they should have gotten more than $0.50. Fox’s primetime audience is double that of ESPN but its carriage fee is less than a fifth. Using a ratio of carriage fees to primetime ratings points, Fox stands at 0.22, below most networks.

Negotiations between service providers and networks are closely guarded so it is very difficult to ascertain just how carriage deals are struck. Audience ratings are certainly not the only factor. ESPN attracts a lot of “hard-to-get male viewers, and even harder-to-get young male viewers” and its relatively high carriage fee is often justified because of this. Network bundling and company associations can also help boost fees. In any case it does seem that the difference in network carriage fees, in proportion to respective audiences, will lessen in the future.