Could DISH Drop CBS, CW Stations Over Retrans Fees?

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There’s yet another fight brewing over rising retransmission fees, and a major “blackout” for DISH Network customers could come as soon as 2am Eastern Tuesday morning.


If that’s the case, the absence of James Corden, Charlie Rose, Drew Carey, and Stephen Colbert — along with local news, prime-time programming, and NFL telecasts — could make CBS viewers both young and old a bit restless.

At the same time, “Supergirl” would be helpless in keeping The CW from fading to black.

Negotiations are down to the wire between DISH and CBS Corp. over a new retransmission fee agreement, and RBR+TVBR has confirmed that both The CW and CBS are impacted in all markets where O&Os are present.

This includes Miami, where the website for CBS WFOR-4 displays the following warning message:

In Miami and in Boston, MyTV Network affiliates would be impacted, as The CW airs on stations not owned by CBS Corp. Additionally, affiliates for The CW in such large markets as New York and Los Angeles would not be impacted as they are owned not by CBS but by Tribune Media.

News of the potential impasse first surfaced during CBS-TV’s 60 Minutes on Sunday evening, when a commercial break featured a message informing DISH customers of the potential lapse in service.

It is not known if premium pay-TV network Showtime or CBS Sports Network are included in the negotiations.

In a statement provided to RBR+TVBR on Monday morning, CBS Corp. said, “For months we have tried to enter into an agreement with DISH. Now, as the deadline nears, DISH appears willing to drop the most-watched television network with the most-popular programming in its entire channel lineup because of the company’s unwillingness to negotiate a fair deal, which other video distributors have struck with CBS.”

CBS stressed how DISH subscribers would be “deprived of a full slate of CBS Sports’ NFL and SEC football coverage” during the Thanksgiving holiday weekend.

“Unfortunately, DISH—a company that has dropped nearly 400 stations since 2013—is not operating with the same sense of urgency,” CBS added in a public comment appearing at KeepCBSOnDish.com.

CBS then slammed DISH for being an difficult negotiating partner with multiple broadcast TV owners. “Unfortunately, DISH’s tactics are something we have seen time and time again. Over the past several months, CBS has been resolute in our efforts to secure a fair carriage deal with DISH.  CBS would very much like to avoid going dark, but unless an agreement is reached our viewers should be prepared to lose CBS from their DISH systems on Nov. 20 at 11:59pm Mountain Time.”

The timing is pegged to the corporate home of DISH Network, in Colorado.

In a statement sent to all media outlets, DISH said it was are actively working to reach a fair deal before the contract expires, “knowing that only CBS can force a blackout of its channels.”

DISH added, “We are unsure why CBS decided to involve customers in the contract negotiation process at a point when there is still time for the two parties to reach a mutually beneficial deal.”

The latest potential disruption for viewers of CBS and The CW on DISH comes nearly three years after a brief blackout period during which CBS pulled its O&O television stations from the Dish Network lineup.

BIG REVENUE SOURCE, BIG DBS HEADACHE

As stated in CBS Corp.’s 2016 annual report, filed with the Securities and Exchange Commission, the company’s Local Media segment — comprised of CBS Television Stations and CBS Local Digital Media — sees revenues generated primarily from advertising sales and retransmission fees.

The Local Media segment contributed 14%, 12% and 13% to consolidated revenues in 2016, 2015, and 2014, respectively, and 22%, 19%, and 20% to total segment operating income in 2016, 2015, and 2014, respectively.

For 2016, a 12% increase in revenues was fueled by not only higher political advertising sales but, notably, 14% growth in retransmission and subscription revenues.

“Results in 2017 are expected to benefit from continued growth in retransmission revenues, driven by the renewal of several of the company’s agreements with MVPDs and annual contractual increases on multiyear agreements with MVPDs,” CBS said in its 10-K filing for 2016.

In its 10-Q quarterly report for the third quarter of 2017, CBS saw its consolidated net revenue grow by 3%, to $3.17 billion. How was this achieved? Growth of 27% in station affiliation fees and retransmission revenues is largely to thank, as advertising revenue decreased 5% driven by lower political advertising sales and lower ratings.

Thus, retransmission fees are a growing source of revenue to combat advertising declines for not only broadcast TV companies such as Gray Television and Nexstar Media Group, but also networks with O&Os.

As such, DISH subscribers should indeed be prepared for static, as an agreement before the clock turns midnight in Denver may not transpire.

It’s been a difficult 2017 for DISH with respect to retransmission fee agreements it has sought to reach with a multitude of broadcast TV owners.

In perhaps the ugliest fight between DISH and a broadcast TV owner, stations owned by Lilly Broadcasting were removed in early October from its lineups in Hawaii; Erie, Pa.; and Corning-Elmira, N.Y. There’s been no word on a resolution.

Then, there is the Hearst Television tussle that finally ended in late April. The new multi-year retransmission fees agreement with DISH came after a nearly two-month stalemate with the owner of stations in 26 markets across 30 states.

The Hearst-DISH battle was particularly fierce. When Warren Schlichting, EVP/Programming at Dish Network, wanted to share an update on the current status of the DBS provider’s negotiations with Hearst, he opted out of a press release. Instead, Schlichting stated his company’s case in a video to Dish customers.

In October, the locally owned company that owns two stations in the Raleigh-Durham market, including its current NBC affiliate, and a TV station in the Wilmington, N.C., market, reached a new long-term retransmission fee agreement with DISH Network.

However, the newly forged accord is a far cry from what transpired in January 2015, when DISH was forced to yank the three stations from its respective North Carolina channel lineups when a new retransmission fee agreement with Capitol Broadcasting could not be reached. At the time, WILM and WRAL were CBS affiliates.

In August 2013Raycom stations went dark on DISH in 36 markets for 10 days, before a new retransmission fee deal was struck.

Other companies that have battled with DISH include Graham Media, which avoided a “blackout” on DISH in July 2015, and Nexstar Media Group, which concluded without a service disruption in December 2014 despite tough negotiations between the two parties.

 


The impacted stations are as follows:

* WUPA-TV, Channel 69 (CW, Atlanta)
* WJZ-TV, Channel 13 (CBS, Baltimore)
* WBZ-TV, Channel 4 (CBS, Boston (Manchester))
* WSBK, Channel 38 (MyTV, Boston (Manchester))
* WBBM-TV, Channel 2 (CBS, Chicago)
* KTVT-TV, Channel 11 (CBS, Dallas-Ft. Worth)
* KTXA-TV, Channel 21 (Independent, Dallas-Ft. Worth)
* KCNC-TV, Channel 4 (CBS, Denver)
* WWJ-TV, Channel 62 (CBS, Detroit)
* WKBD-TV, Channel 50 (CW, Detroit)
* KCBS-TV, Channel 2 (CBS, Los Angeles)
* KCAL-TV, Channel 9 (Independent, Los Angeles)
* WFOR-TV, Channel 4 (CBS, Miami-Ft. Lauderdale)
* WBFS-TV, Channel 33 (MyTV, Miami-Ft. Lauderdale)
* WCCO-TV, Channel 4 (CBS, Minneapolis-St. Paul)
* WCBS-TV, Channel 2 (CBS, New York)
* KYW-TV, Channel 3 (CBS, Philadelphia)
* WPSG-TV, Channel 57 (CW, Philadelphia)
* KDKA-TV, Channel 2 (CBS, Pittsburgh)
* WPCW-TV, Channel 19 (CW, Pittsburgh; also available in Johnstown-Altoona-State College PA)
* KOVR-TV, Channel 13 (CBS, Sacramento-Stockton-Modesto)
* KMAX-TV, Channel 31 (CW, Sacramento-Stockton-Modesto)
* KPIX-TV, Channel 5 (CBS, San Francisco-Oakland-San Jose)
* KBCW-TV, Channel 44 (CW, San Francisco-Oakland-San Jose)
* KSTW-TV, Channel 11 (CW, Seattle-Tacoma)
* WTOG-TV, Channel 44 (CW, Tampa-St. Petersburg (Sarasota)

 


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