Comparing MVPD cost-containment strategies


MoneyTWC, DirecTV and Dish Network have been in the news lately as participants in hardball retransmission consent battles that have led to blackouts. But that’s not the only way to play the game, say the analysts at SNL Kagan.

Broadcasters have been contending for some time now that the vast majority of retransmission contracts are signed without blackouts. And they point to the three aforementioned MPVDs as the source for the vast majority of the blackouts that do occur.

It is of course incumbent to remember that in many cases, broadcasters aren’t even involved, as is the case in the ongoing and perhaps permanent failure to see eye to eye between Dish and cable programmer AMC.

All MVPDs have an interest in keeping programming costs down – (here’s a rare and brief in-article RBR-TVBR observation: Duhhhhh!) – but the Kagan report says there are two basic ways to go about it.

It notes that the three aforementioned MVPDs are taking the hardball confrontational route, and seem perfectly content to accept blackouts are part of that strategy.

In the case of Dish/AMC, SNL’s Derek Baine noted that Dish may be willing to accept the complete absence of AMC Network programming on its system, citing high costs for low viewership.

The other tactic doesn’t get in the news. There is no news value to an amicable retransmission agreement for a number of reasons, in the opinion of RBR-TVBR. The value of the deal is never, ever released, so there is nothing you can put a $ in front of. And there is no reported conflict. Negotiations were going on behind the scenes, they were resolved behind the scenes, there wasn’t a blackout – in short, there is no news!

According to the Kagan report, Comcast has been pursuing a strategy that leads to a lack of news. It gets its deals done quietly.

And here’s its strategy to hold down costs – it tries to lock in deals for the long term. It negotiates its best deal without driving the negotiations to the point of a programming blackout, knowing that if it can get enough years into the mix it can acquire a valuable commodity: Certainty. It will know and be able to control its costs.

Programmers, whether they are providers of broadcast content, basic cable channels or both, have no objections to the Comcast approach for the same reason: They get certainty too!

RBR-TVBR observation: The Kagan analysis, if correct, clearly supports the contention of the NAB and broadcasters that it is a mere handful of MVPDs that are causing the vast majority of blackouts.

Heed these words carefully, Members of Congress:

You all know how difficult it is to get legislation – any legislation – passed these days.
You also all know you can score points with disgruntled constituents who missed an episode of their favorite show because of a retrans blackout.

And here’s evidence you can use: There would appear to be a smoking gun in this case, and it is in the hands of TWC, DirecTV and Dish. So the next time there is an egregious blackout, you can use the politically successful phrase once used by Ronald Reagan — “There you go again” – in reference to whichever of the three has provoked it.