A new study by SNL Kagan shows that while on the surface it appears that Al Jazeera may have paid a reasonable price for Current TV, there is s strong possibility that the purchase may cost the Qatar-owned propaganda network far more than $500 million.
SNL Kagan analyst Derek Baine noted that prior to the purchase, Current was available in 60 million households. But as soon as the transaction was announced, the second largest cable operator, Time Warner Cable Inc., exercised the change of ownership clause and plan to drop the struggling network from its system as soon as possible.
According to Baine, the loss of Time Warner Cable’s nine million subscribers will move the network to a break-even level at best. He believes that Al Jazeera will be forced to drop its licensing fees altogether in order to convince operators to carry the newly rebranded network. This would be a severe blow to the financial structure, as it now relies on subscriber fees for 80% of its revenues.