The New Year has barely begun, but already consumers are faced with TV blackouts after broadcasters and pay TV distributors have been unable to reach new agreements for retransmission rights. But while the latest disputes have hit a limited number of satellite subscribers, the ongoing trend shows a rift that could permanently change the pay TV landscape.
Local stations went dark for some DirecTV subscribers over the weekend, as Northwest Broadcasting pulled local stations Binghamton, N.Y.; Medford, Ore.; Yakima and Spokane, Wash.; and Laredo, Texas when the two failed to reach a retransmission agreement before a Jan. 1 deadline. And Dish Network failed to reach a deal with Frontier Radio Management, which licenses local Fox (s NWS) affiliate WGXA in Macon, Georgia and digital multicast ABC affiliate WGXA-D, Broadcasting & Cable reports.
Time Warner Cable (s TWC) has avoided the same fate in its retrans negotiations with Sinclair Broadcasting, which the cable provider says carries broadcast programming that is viewed by 4 million of its subscribers. By agreeing to a two-week extension at the 11th hour, Time Warner Cable has bought itself some time, but it is not out of the woods yet. That said, Sinclair could have lost a good deal of leverage in its negotiations; as BTIG Research analyst Richard Greenfield points out, all college football games and all local NFL games will be played by January 15.
TV blackouts were all the rage in 2010, as negotiations got increasingly heated between TV programmers and distributors. Last year, the number of blackouts that consumers faced broke records, as broadcasters asked for higher rates while distributors attempted to hold the line on the rates they charged consumers. For the most part, pay TV distributors have been unsuccessful on that front, with rates rising between 5 and 10 percent last year, and more increases being on the way.
The negotiations between Time Warner Cable and Sinclair are particularly interesting. The cable provider says it has offered a number of different options to the programmer, including the option of arbitration and the ability to offer Sinclair stations on an a la carte basis – a proposal that would be anathema even just a few years ago.
If Time Warner Cable is serious about making channels available a la carte, it could be the beginning of the end for how we think about the cable bundle. Already the cable company has announced a lower-cost cable package targeted at low-income subscribers that strips out some of its more expensive programming. But that bundle is a half-measure that seems unlikely to gain real traction. True a la carte would allow consumers to cut out programming they didn’t want to pay for, but could be disastrous for cable programmers — especially niche programmers — that don’t draw huge audiences.
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