Dish Network had until 11:59pm MDT on Sunday, July 21 to cut a deal that paid The Walt Disney Company more money or satellite and streaming customers could have lost access to five Disney-owned networks: National Geographic, FX, FXX, FXM (Movies), and NatGeo Wild.
“Our contract with Dish for the FX and National Geographic networks is due to expire soon, so we have a responsibility to make our viewers aware of the potential loss of our programming,” NatGeo and FX said in a statement last week. “However, we remain fully committed to reaching a deal and are hopeful we can do so.”
The deadline came and went and so far, the networks remain on the lineup after both parties agreed to extend talks.
The cable networks were formerly owned by 21st Century Fox, but were part of a package sale worth $71.3 billion to Disney in March.
Separate negotiations are also underway with the Fox Regional Sports Networks, which also achieved a temporary extension. Both sides indicate they are optimistic they will arrive at a deal.
Negotiations with Meredith Corporation’s 17 over the air TV stations did not fare as successfully. Satellite and streaming customers lost access to those stations last week.
Amazon wants to be a major player in live regional sports television, aggressively bidding for the 22 regional sports network that Disney acquired from 21st Century Fox, according to a report from CNBC.
The undisclosed bid covers all of the Fox Sports networks plus YES – the New York Yankees network.
If successful, the e-commerce company would win broadcasting and streaming rights for 44 pro teams from the NBA (basketball), NHL (hockey), and MLB (baseball).
Amazon’s competing bidders include Wall Street funds and broadcasters, including Apollo Global Management, KKR, The Blackstone Group, Sinclair Broadcast Group and Tegna. The New York Yankees are also interested in taking a majority interest in YES, the cable network that features its games.
As part of a major asset sale, Fox sold many of its television and movie properties to Disney, but the federal government ordered Disney to divest its interest in Fox’s regional sports networks to win approval of the deal. There is a possibility Fox may attempt to buy back its sports networks. John Malone, a long time cable industry insider, predicts Fox is the most likely winner if they do bid, having sold the networks to Disney for $15 billion and potentially buying them back for as little as $8 billion.
Should Amazon win control of the regional sports networks, it will become an even larger player in live sports entertainment. Amazon Prime began streaming NFL games to subscribers on Thursday evenings in 2017, reportedly paying the NFL $65 million per year under the deal.
CNBC reports Amazon is bidding to take control of 22 Fox regional sports networks now owned by Disney. (4:44)
Phillip DampierApril 20, 2017Charter Spectrum, Consumer NewsComments Off on Fox Nears Deal With Charter to Keep FX and Fox Regional Sports on the Dial
Fox Networks Group is nearing a deal with Charter Communications that will keep several Fox-owned channels from disappearing from the Spectrum cable dial.
Recently, Fox has stopped running ads attacking Charter’s potential disruption of FX, National Geographic, and a number of Fox regional sports networks. Fox has also extended its deadline several times, and Fox programming continues uninterrupted on Charter’s cable systems as the talks continue.
Now FNG president and COO Randy Freer is ready to say publicly, “we’re working out the issues.”
Broadcasting & Cablereports one of those issues could be the ongoing lawsuit between Fox News Channel and Charter that was filed after acquiring Time Warner Cable. Charter began paying Time Warner Cable’s considerably lower FNC affiliate fee in markets where Charter’s original cable systems were under contract at a higher rate. One part of the agreement may be a settlement of that lawsuit.
There is no word on exactly when a final agreement will be reached, but it is increasingly unlikely the negotiations will result in any dropped channels for Charter customers.
Every week brings the threat of yet another programming blackout because cable programmers want to be paid more and cable operators want to pay the same or less. This time, Fox Networks Group has sent a final warning to Charter Communications that their customers will lose several cable networks as soon as Wednesday if the two companies cannot reach a renewal agreement.
“Fox and Charter have an agreement to carry the Fox networks that Charter has chosen to ignore,” Fox said in a statement that was updated today. “We’re disappointed that despite our best efforts to reach a resolution, Charter Spectrum subscribers could lose access to multiple Fox sports and entertainment networks on April 12.”
The latest dispute surrounds the lucrative volume discounts that Time Warner Cable formerly negotiated for some of Fox’s non-news-related cable networks. Charter Communications acquired both Time Warner Cable and Bright House Networks to secure those kinds of volume discounts for itself. In general, the larger a cable system is, the lower the wholesale rate charged for cable programming. Charter hoped it could continue paying the lower rates Time Warner Cable managed to secure after acquiring the much larger cable system. But cable programmers are not buying Charter’s approach and in one case sued.
In March, Univision blocked Charter from carrying its Spanish-language networks Univision, Unimás, Galavisión, Univision Deportes and El Rey in a similar dispute. A temporary restraining order brought the networks back to the lineup a day later, at least temporarily. Univision sued Charter Communications in 2016 over the programming fee dispute.
A significant amount of money is at stake depending on which side ultimately wins in court.
In the case of Univision, Charter’s own contract with the Spanish language programmer expired on June 30, 2016. That would normally require Charter to negotiate a contract renewal that it knew would be more costly than what it paid under the old contract. Charter learned Time Warner Cable had negotiated a contract with Univision that delivered better volume discounts and was not set to expire until June 2022.
To allow Charter Communications to argue that Time Warner Cable’s contract should continue to apply after the merger, it structured its acquisition (on paper at least) to allow Charter to claim Time Warner Cable would continue to manage all of its cable systems. Charter’s lawyers argued that because “Time Warner Cable” is in charge, the wholesale rates Time Warner Cable negotiated should now apply to all Charter systems.
Univision, among other programmers, balked at Charter’s creative thinking.
“Everyone knows that is simply not true: the longstanding CEO and the senior executive team of Charter, as well as its pre-existing board of directors, now in fact manage and control all such cable systems, and virtually the entire TWC leadership team has departed,” Univision argued in its 2016 lawsuit.
If the programmers win, Charter will have to negotiate new carriage agreements at 2017 prices instead of continuing to pay the lower rates Time Warner Cable won for itself in the past.
A similar dispute is likely behind the current battle between Charter and Fox. Each time a cable company has to negotiate a new contract, programmers tend to ask for a considerably higher wholesale price for their channels and try to get cable systems to also carry their other networks. When a cable operator refuses to pay what it considers to be an unconscionable renewal rate or does not want to carry the programmer’s other networks, a showdown takes place that often leads to channels being temporarily removed from the lineup. Cable companies usually lose these battles after subscribers get hostile, but some smaller cable operators have walked away from programmers like Viacom for good when the renewal price stayed too high.
As is the tradition in these disputes, Fox launched a website and social media blitz to warn Charter customers they are about to lose access to 19 regional sports channels, FX, FXX, FOX Movie Channel, National Geographic TV, Fox Sports and Fox Deportes and asked customers to start calling Charter and complain. The current dispute does not involve the FOX (TV) Network, the Fox News Channel or the Fox Business Channel.
“We’re disappointed that despite our best efforts to reach a resolution, Charter Spectrum subscribers could lose access to multiple Fox sports and entertainment networks on April 12,” FOX wrote on its website. “Charter’s tactics could result in its subscribers missing our popular programming including Fox Sports’ telecasts of the St. Louis Cardinals and Blues, Kansas City Royals, Cleveland Cavaliers, Cincinnati Reds and many other MLB, NBA and NHL teams on Fox Regional Sports Networks, Fox Deportes, National Geographic, and FX’s hit dramas The Americans and Feud as well as much more award winning programming.”
“Fox is trying to gouge our customers using the increasingly common tactic of threats and removal of programming,” Charter responded in a statement. “They are attempting to extort Charter for hundreds of millions of dollars. We will continue to work towards a fair agreement.”
Fox Networks is using this ad to warn Charter Spectrum customers they could lose Fox programming. (0:30)
Hulu’s still-to-be-announced live TV streaming service designed to give subscribers an alternative to bloated and expensive cable-TV packages will lose “real money” if it is priced at around $40.
BTIG Reseach analyst Brandon Ross’ research note to investors (reported by Fierce Cable) claims Hulu faces big expenses to include sports and CBS programming — the one network that isn’t a part-owner of Hulu — into its forthcoming package of live and on-demand programming. With most sources claiming Hulu intends to price the service starting at prices as low as $35-40 a month for a slimmed down package of cable television and over-the-air stations viewable on one device and $50 a month for those wanting to watch on multiple devices, Ross predicts the service will rapidly run into the red because of programming costs.
Hulu’s live streaming service could be a real game changer for online cable TV alternatives, because it is expected to contain a robust assortment of popular cable networks and regional sports channels that could appeal to a wider marketplace than even slimmer packages from Sling TV.
Video margins are dropping as programming costs continue to grow. Cable operators are turning to broadband to make up the difference, but virtual providers like Hulu don’t have that option.
“The ramifications of success could have an effect that goes far beyond just Hulu’s partners, from [competing cable TV providers] to cable networks to Netflix. A failed Hulu virtual [cable-TV provider] could dispel the idea of widespread competition for incumbent bundles from virtual bundled competitors,” Ross wrote in his research note. “We are skeptical that the Hulu bundle will meaningfully impact the [cable-TV] landscape from a subscriber standpoint. We simply wonder whether the price/value will be strong enough to attract customers at ~$40, with much less content than the current larger bundles.”
Ross predicted Hulu will bundle several expensive sports networks, as indicated in surveys Hulu sent to potential customers. Those surveys suggested Hulu’s service will include a variety of Regional Sports Networks from Hulu’s owners, which include Fox and Comcast-NBC. One potential exclusion is Madison Square Garden Network (MSG), a potential omission that concerned MSGN investors enough to drive the share price down after a significant spike in mid-August.
The issue of MSG could open an interesting new front in the war on cable television pricing. MSG’s viewership is focused in New York, New Jersey and Connecticut and one of the largest cable providers in the region is cost-conscious Altice USA, which took over Cablevision. Ross states MSG Network’s addition on the Hulu lineup could give Altice more leverage to force better contract renewal terms.
“For instance, Altice could theoretically tell those that want MSGN to switch their video provider to Hulu, while staying on Altice for broadband,” Ross wrote. “We do not believe this would be an ideal approach for either party, but it is possible.”
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