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Dish Network and Turner Broadcasting at Impasse
| published October 21, 2014 |

By Thursday Review staff

 

Negotiations between cable companies, satellite providers, and content providers (i.e.: the networks) can sometimes get nasty. The talks go on, sometimes for many months, even years, mostly behind the scenes and away from a lot of public chatter and news scrutiny—after all, companies like Comcast, Time Warner, News Corp, DirecTV and Cablevision want nothing more (generally speaking) than to make these negotiations over costs and fees as transparent as possible for customers.

Normally what is at issue is the cost of retransmission and carriage: a network which produces programs wants to be compensated by distributors like satellite companies and cable companies. Conversely, cable companies and satellite companies provide a mass platform for networks to reach as many customers as possible, which boosts the value of ad dollars. That means that the door—in theory at least—swings both ways. As a result, companies sit down to negotiate how the fees and costs will play out, who will pay for what, how any changes will affect long-term budgets, and how those changes will cause the satellite and cable bill of Jane Q. Customer to go up.

In a perfect world, such negotiations work out to the benefit of all parties, and cable and satellite customers simply grouse about the small increase in their billing which they see each new year, typically in January or February.

But sometimes those talks between the major parties get bottlenecked. When an impasse is reached, channels can suddenly—and with little warning—disappear from channel line-ups. The companies exchange public barbs and accusations, and attempt to spin the disruption to their advantage by placing the blame squarely on the other guy. Case in point: September 2013, when CBS programming was famously yanked from the channel line-ups of an estimated 19 million Time Warner subscribers in the U.S. After nearly a month, the two companies finally reached a new agreement, but only after hundreds of thousands of complaints from customers.

Such is the case this week in the epic struggle now unfolding between Turner Broadcasting and Dish Network. On Monday, millions of Dish customers turned on their TVs to discover that seven channels were missing—among them, Turner Classic Movies, Cartoon Channel, Headline News, TruTV, and the highly popular news channel CNN. Also lost were Boomerang and CNN en Espanol. Dish removed the channels on Monday after it failed to reach a new agreement with Turner Broadcasting. Dish Network has about 14 million subscribers.

In a statement, Dish senior vice-president Warren Schlichting said that the problem resides with Turner Broadcasting, not Dish.

“In the past year,” Schlichting said, “Dish Network has successfully renewed agreements with many large content providers. As a result, we are confident that we have offerred a deal to Turner that reflects an appropriate value for our customers.”

Alternately, Turner placed the burden of blame directly at the door of Dish.

“Turner has worked diligently for months,” its statement reads, “to come to a fair agreement, including multiple extensions and compromises, and it is unfortunate that Dish is once again operating in a disruptive manner that takes away networks and programming from their customers.” Turner also said that it was hopeful that both sides could return to the conference table and reach an agreement soon.

In the meantime, millions of Dish TV customers who want to watch breaking news on CNN, or those households with kids who spend time in front of Cartoon Network, must bide their time by watching substitute programming, or—in some cases—a blank channel.

Part of the problem, many media and television analysts say, is that the cost of original programming continues to rise. Many of the networks that were once content to simply buy the rights to replay other, previously-produced programs and TV reruns are now producing their own original shows and series, and as the competition to grab and hold viewers increases, so too do those production budgets. Original series and network-produced documentaries now make up what is rapidly becoming the lion’s share of programming. The battle for loyal viewers has become so intense that some have likened it to an arms race—with even Netflix moving rapidly into the business of original shows. And even the cost of sports and news programming—once relatively cheap—has skyrocketed to new dizzying levels.

Such inflation in the programming phase means that everyone pays more—first at the negotiating table, and later as customers see those higher cable and satellite bills.

Related Thursday Review articles:

Who Really Owns That TV Signal?; R. Alan Clanton; Thursday Review; April 23, 2014.

Do Recent Cable Mergers Signal Worse Customer Satisfaction?; Thursday Review; May 20, 2014.