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FCC’s Wheeler to Consumers: Contract Dispute TV Blackout? You’re On Your Own

Wheeler

Wheeler

The Federal Communications Commission has decided it won’t get too involved in the increasing number of contract renewal disputes between TV networks and cable TV providers, and has refused to issue new rules governing what represents “good faith negotiations” in disputes that take channels off the lineup.

“Based on the staff’s careful review of the record, it is clear that more rules in this area are not what we need at this point,” said FCC chairman Thomas Wheeler. “It is hard to get more inclusive than to review the ‘totality of circumstances.’  To start picking and choosing, in part, could limit future inquiries.”

A growing number of disputes over the rising cost of video programming frustrate pay-TV customers who find strident messages about nasty programmers or greedy providers blocking their favorite channels after contract renewal talks fail. Cable operators, sensitive about cord-cutting, want to keep price hikes down. Wall Street and shareholders expect growing revenue from charging providers for access to programming, which has become a major revenue source for most. Wheeler wrote Congress had good intentions to put a stop to contract disputes that eventually affected the public:

Congress, in Section 325 of the Communications Act, sought to reduce the likelihood that TV viewers would face this roadblock. The law requires broadcasters and multichannel video programming distributors (MVPDs) to negotiate for retransmission consent in good faith. Congress gave the Commission the authority to keep an eye on these negotiations, and our rules include a two-part framework to determine whether broadcasters and MVPDs are negotiating in good faith.

  • First, the Commission has established a list of nine objective standards, the violation of which is considered a per se breach of the good faith negotiation obligation.
  • Second, even if the specific standards are met, the Commission may consider whether, based on the totality of the circumstances, a party failed to negotiate retransmission consent in good faith.

In the recent STELA Reauthorization Act of 2014 (STELAR), Congress expressed concern about the harm consumers suffer when negotiations fail and sought-after broadcast programming is blacked out on their pay TV service. STELAR directed the Commission to initiate a rulemaking to consider possible revisions to our “totality of the circumstances” test.

Everyone has a different opinion of what represents “good faith” and many of these disputes quickly get acrimonious. Or worse. Take the one-month-and-counting little hatefest between Tribune Media and DISH Network also known as Satan’s Mother-in-Law v. the Zika virus. Tribune blacked out DISH customers’ access to 42 local channels in 33 markets, including WGN Chicago, WPIX New York and KTLA Los Angeles back in June. Many are major network-affiliated over the air stations. The dispute, as usual, is over money. Tribune wants DISH to bundle WGN America, a low-rated basic cable network, with its Tribune-owned stations, as a condition for renewal.

dish dispute

WGN America has little to do with WGN-TV, the over-the-air independent former superstation based in Chicago. As of late 2014, WGN America runs a vastly different schedule of syndicated sitcoms, drama series and feature films, and some first-run original television series produced exclusively for the channel. Long gone are local, syndicated, or sports shows that a viewer in Chicago would see watching channel 9 over-the-air. As a result, viewership of WGN America is 20% less than the former WGN-TV, and dropping. Many of the shows on WGN America also turn up on other cable channels, making the network a questionable addition to the lineup.

WGN America, not your father's Channel 9 from Chicago.

WGN America, not your father’s Channel 9 from Chicago.

DISH obviously has no interest in WGN America, but Tribune’s negotiators told them they better get interested, because WGN America will come along for the ride, part of any renewal for the over-the-air stations Tribune owns.

DISH is in no hurry to negotiate over the summer months, when shows are repeats and folks are on vacation. Many expect that will change once football season nears. But the battle continues anyway.

A new low was reached a few weeks ago when a frustrated Rev. Jesse Jackson claimed in an open letter that DISH’s refusal to negotiate was racist, in part because the blackout affected the show Underground, chronicling the Underground Railroad system that helped slaves escape to the northern free states.

“Is DISH using the same kind of math with ratings that the old south employed when enacting laws that counted African-Americans as three-fifths of a man?” wrote Jackson in a letter released by his Rainbow Push Coalition. “For far too long African-Americans have been underrepresented and unfavorably portrayed on television, silencing the significant contributions they have made to this country. Underground is a crucial part of a brand-new day of diversity on television that sheds a bright light on the bravery, ingenuity and power of the African-American experience, and is being used as teachable moments in homes and history classes around the nation at a time when we need it most.”.

Jackson

Jackson

DISH avoided taking the bait, responding, “We are skeptical that Rev. Jackson is truly interested in finding a fair deal for DISH customers.”

The FCC isn’t apparently interested in putting a line in the water either, steering clear of the controversy and allowing programmers and networks to continue to work things out with each other while customers watch repeating barker channels claiming none of this is the fault of their provider.

Wheeler points out he is aware of the DISH/Tribune dispute, but isn’t exactly rushing to end it.

“I summoned both parties to Washington to negotiate in coordination with Commission staff,” Wheeler wrote. “When that step failed to produce an agreement or an extension, the Media Bureau issued comprehensive information requests to both parties to enable FCC staff to determine whether they were meeting their duty to negotiate in good faith; we are reviewing their responses as I write. If that review reveals a dereliction of duty on the part of one or both parties, I will not hesitate to recommend appropriate Commission action.”

To DISH viewers, that represents a “definite maybe.”

At the end of last month DISH decided it wasn’t “good faith” when the Tribune subsidiary operating WGN America started running ads calling DISH a “dishgusting” company. Too much? Apparently so for DISH’s lawyers who filed a lawsuit.

“In a last-ditch bid to force DISH to accept its terms, DISH is informed and believes, and thereon alleges, that Tower created and broadcast, via its channels, disparaging content regarding DISH, its services and its performance,” states the complaint. “The campaign launched by Tower with these commercials cast DISH in an extremely negative light — Tower claims that DISH has not acted in good faith, that its performance and services are the worst in the industry, and even that DISH is a ‘disgusting’ company.”

Apparently, DISH maintains a disparagement clause in its old contract with Tribune, designed to stop nasty exchanges like this. Tribune called the lawsuit frivolous and the FCC today effectively called it a day.

Time Warner Cable’s LA Dodgers Dispute Giant Win for KDOC-TV; Paid to Carry Must-Watch Games

Phillip Dampier September 30, 2014 Consumer News, Public Policy & Gov't, Time Warner Cable/Spectrum, Video Comments Off on Time Warner Cable’s LA Dodgers Dispute Giant Win for KDOC-TV; Paid to Carry Must-Watch Games
Struck Out

Struck Out

For most of the current baseball season, Los Angeles Dodgers fans who don’t subscribe to Time Warner Cable have been shut out, unable to watch the games shown exclusively on the extremely expensive SportsNet LA cable network, jointly owned by the Dodgers and Time Warner Cable.

Most of Time Warner’s southern California competitors balked at the asking price: about $4 a month per subscriber. Had they agreed to carry the network, subscribers would ultimately pay for it during the next round of rate hikes, whether they watched sports or not.

Time Warner Cable has a 25-year, $8.35 billion dollar contract to manage the network, and observers believe they have struck out.

“They rolled the dice and lost big time,” said Jimmy Schaeffler, head of consulting firm the Carmel Group.

With networks like ESPN commanding whatever they set as an asking price, sports team owners have rushed to get a piece of the lucrative sports network pie. Even individual teams are now demanding their own exclusive networks, hoping to charge top dollar to companies agreeing to carry them.

Angry cable customers watching their bills skyrocket can primarily blame sports programming for much of the endless increases. Around 20 regional and national sports channels now comprise 20% of the wholesale cost of cable television — a high percentage considering the average cable system now carries over 200 channels. While some basic cable networks are lucky to get 10 cents a month per subscriber, regional Fox Sports North demands $4.67 a month from each subscriber, whether they watch the network or not. Smaller independent cable systems usually pay even more.

sports fees

In southern California, the average cable subscriber pays $20 a month for seven sports channels. There was little interest raising that to more than $24 a month to carry what Dodgers team president Stan Kasten called, “a Dodger-only channel with Dodger-only content 24/7.”

“We’ve been approaching a tipping point in sports programming costs for years and the Los Angeles market has sent a strong message that we’ve reached it,” Andy Albert, senior vice president of content acquisition at Cox Communications, one of the distributors that declined to carry SportsNet LA, told the Wall Street Journal.

kdocThe embargo has cost both the Dodgers and Time Warner Cable plenty of advertising and subscription revenue. Ratings are dramatically down from an average of 228,000 viewers when the baseball games were shown on widely carried Prime Ticket, to just 55,000 today on SportsNet LA. Advertising rates have been slashed to compensate for the lack of an audience.

The cost of the dispute between Time Warner Cable and its competitors also included bad public relations, which attracted the attention of regulators at the FCC and area elected officials, who have loudly complained that viewers are increasingly caught in the middle of these disputes.

The pressure worked, and Time Warner Cable announced in mid-September it would broadcast the six final Dodgers games of the season locally for free on KDOC-TV, an independent channel based in Orange County mostly known for airing endless reality shows and reruns of off-network series. On a good day, KDOC attracts at most 18,000 viewers. But the station is doing better today — grabbing an average of 259,000 viewers last week during one Dodgers game — essentially the same audience the Dodgers used to have before SportsNet LA came along. Even better for the station, Time Warner Cable is paying KDOC to carry the games.

KDOC management is now desperately trying to figure out how to keep its new audience after baseball season ends, running promotions for its various shows as often as possible. The station is easy enough to find over-the-air and on every significant cable, satellite, and telco-TV operator. But with more than three dozen high power, low power, and digital sub-channels to choose from across Los Angeles, the Inland Empire, and Orange County, airing stale series and courtroom drama shows may not be enough.

http://www.phillipdampier.com/video/KDOC Los Angeles New Years Show Eve Show of FAIL 12-31-12

Many Los Angeles residents became familiar with KDOC after the station attracted national media coverage for its infamous 2013 New Year’s special hosted by actor and comedian Jamie Kennedy. As viewers watched the slow motion train wreck unfold with D-listers like Shannon Elizabeth, they were treated to endless technical issues, dead air, sudden commercials in the middle of interviews, open mics, unbleeped profanity, a stand-up routine not suitable for children or broadcast television, and special musical guests like rappers Bone Thugs-n-Harmony who dropped F-bombs on live television. Nobody at KDOC thought of pulling the plug, despite violating just about every FCC content regulation. It finally ended with an inebriated Macy Gray hoping to hurry along the festivities and, as the credits rolled, a sudden on-stage fight. Kennedy thanked fast-food chain Carl’s, Jr. for sponsoring the event, which undoubtedly caused extreme discomfort until they could disavow their involvement. An exasperated KDOC engineer assembled this montage of the disaster, which is definitely not suitable to watch at work. (6:23)

DirecTV Doubles Down on Dispute Over The Weather Channel; Embracing WeatherNation Instead

Phillip Dampier February 10, 2014 Consumer News, DirecTV, Video 2 Comments

weathernationEfforts by The Weather Channel — thrown off DirecTV over a fee dispute — to suggest its replacement is inadequate may have taken a hit this morning when WeatherNation announced a significant expansion of its weather network.

WeatherNation is largely unknown outside of the 20 million DirecTV subscribers that found the Colorado-based weather network on their lineup instead of The Weather Channel in mid-January. Now the weather network has announced expanded weather services for DirecTV subscribers:

  • Local Weather Now: Access customized local weather information at the zip code level. DirecTV subscribers can tune to Ch. 362, press the red button on their remote, and access local weather and forecasts. Local weather information will also be inserted into the live WeatherNation broadcast and run every 10 minutes;
  • Severe Weather Mix: In early March, WeatherNation will activate Severe Weather Mix during major weather events showing up to six concurrent feeds of weather information, including coverage from local broadcast stations, where available, live remotes from meteorologists in affected areas, live radar with storm tracking information, NOAA weather alerts, and live coverage from top cable news channels including CNN and Fox News.

weather channel“The Severe Weather Mix and Local Weather Now services will utilize cutting-edge technology, compelling graphics, expert forecasting ability and story-telling skills to quickly and conveniently communicate complex patterns and explain weather phenomena to viewers at home,” said Michael Norton, president of WeatherNation TV, Inc. “We are committed to reliable, consistent, round-the-clock weather information that is meteorologically accurate.”

The Weather Channel was removed by DirecTV after contract renewal negotiations broke down over a requested fee increase from the programmer. DirecTV countered customers were annoyed The Weather Channel was devoting an increasing amount of its primetime programming to reality TV shows that interrupted forecast information. It also claimed the weather network’s ratings were declining.

The Weather Channel is airing viewer comments about the loss of the network from DirecTV’s lineup. (2:06)

The Weather Channel Is Off DirecTV Over a $0.01 Rate Dispute

Phillip Dampier January 14, 2014 Competition, Consumer News, DirecTV, Video 4 Comments

weather channelThe Weather Channel has been removed from DirecTV’s lineup and replaced with WeatherNation, a much-smaller channel based in St. Paul, Minn., because the popular weather network reportedly sought a $0.01 monthly rate increase.

DirecTV subscribers told Stop the Cap! the channel change happened just after midnight, although WeatherNation was already a part of DirecTV’s lineup.

“This is unprecedented for the Weather Channel,” said David Kenny, CEO of the Weather Channel’s parent company. “In our 32 years, we have never had a significant disruption due to a failure to reach a carriage agreement.”

directvThe Weather Channel has launched a campaign to restore the network that carries the impression DirecTV does not care about the safety of their customers. The Weather Channel executives have stated their severe weather coverage is unparalleled and would leave satellite dish customers in rural areas without important information about dangerous weather.

But Dan York, responsible for DirecTV content, said weather information is available from a variety of sources, especially smartphones, and The Weather Channel has drifted away from its core weather mission, devoting up to 40 percent of its programming to reality TV shows.

bring back weather

The two sides are far apart, even arguing over the amount of the increase The Weather Channel wants for its programming. Executives at The Weather Channel claim their requested increase amounts to $0.01 per month, per subscriber, on top of the $0.13 average cost distributors pay for the weather network. DirecTV says it is substantially more than that and it seeking a 20% rate cut due to declining ratings.

The Weather Channel lacks the clout major corporate conglomerates like NBC Universal, Time Warner Entertainment, or Viacom have when negotiating contract renewals. Instead, it is counting on its loyal audience to bring the fight to the satellite provider.

So far, viewers seem to be responding. An anti-DirecTV website run by The Weather Channel has received more than 700,000 page views and reportedly brought 150,000 complaint calls to DirecTV customer service.

The Wall Street Journal reports the advent of smartphones has taken a significant toll on The Weather Channel’s viewership, leading DirecTV to ask for a 20% rate cut. (4:17)

Another Programming Dispute: Media General TV Stations Off DISH Network

Phillip Dampier October 1, 2013 Consumer News, Dish Network, Video Comments Off on Another Programming Dispute: Media General TV Stations Off DISH Network

media generalMedia General today issued a statement saying they have failed to reach a retransmission consent agreement with DISH Network and 18 local stations in the eastern half of the country are off the satellite provider’s lineup as a result.

The stations:

  • Alabama: WVTM-NBC in Birmingham, and WKRG-TV in Mobile
  • Florida: WFLA-NBC in Tampa
  • dish logoGeorgia: WJBF-ABC in Augusta, WRBL-CBS in Columbus and WSAV-NBC in Savannah
  • Mississippi: WHLT-CBS in Hattiesburg and WJTV-CBS in Jackson
  • North Carolina: WNCT-CBS in Greenville, WNCN-NBC in Raleigh-Durham and WYCW-CW in Asheville
  • Ohio: WCNH-NBC in Columbus
  • Rhode Island: WJAR-NBC in Providence
  • South Carolina: WCBD-NBC in Charleston, WBTW-CBS in Florence-Myrtle Beach and WSPA-CBS in Greenville-Spartanburg
  • Tennessee: WJHL-CBS in Tri-Cities
  • Virginia: WSLS-NBC in Roanoke-Lynchburg

“Our highly rated television station is an important asset to our local community and it is unfortunate that DISH does not recognize our fair market value,” said WNCN general manager Douglas Hamilton. “Although we have successfully completed agreements with other cable and satellite operators, DISH has refused to reach a similar agreement.”

Media General has been approving extensions of DISH’s retransmission contract since it expired in June, but the broadcast station group owner denied an extra extension of the contract that expired Sept. 30.

Media General is in the process of merging with Young Broadcasting — a deal that was also originally announced in June. DISH already has a retransmission agreement with Young and hoped to bundle the extension into that agreement, but Media General refused.

“The only reason for Media General to reject that offer is to try to squeeze consumers for more money, to the tune of five times what DISH currently pays,” said Sruta Vootukuru, DISH’s director of programming. “We’re working on behalf of our customers to keep the programming at a fair price.”

Affected Media General-owned TV stations are telling viewers to use a traditional antenna or switch to one of DISH’s competitors.

WNCN’s general manager Doug Hamilton explained to viewers why the station was no longer on DISH Network’s service in Raleigh, N.C. (1 minute)

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