Q., I saw your column on the DIRECTV and Tegna blackout maybe ending this week. But what about Dish’s fight with the Nexstar stations? What’s your opinion on that? — Claire, Carson City, California.
Claire, as you know, Dish last week lost 164 Nexstar-owned local TV stations (and WGN America) due to differences over how much it should pay the broadcaster in carriage fees. The blackout is the latest programming interruption for Dish subscribers with the satcaster engaged in at least eight other fee fights.
I said here last week that I thought AT&T would settle its carriage dispute with Tegna sometime this week. But I’m not as hopeful for the Dish-Nexstar blackout.
There are two major differences between Dish and AT&T on how they handle these situations.
1. Dish Chairman Charlie Ergen has acknowledged publicly that blackouts can be profitable for his company because it allows Dish to withhold fees while not carrying the channels. In addition, Ergen has said taking a hardline stance in these negotiations ultimately reduces the payment if and when his company does settle. (And they don’t always settle. Dish has been without HBO and Cinemax for 25 months.) Both factors allow Dish to keep subscribers’ monthly bills lower than its rivals.
This is not to suggest AT&T, or any other pay TV operator, doesn’t consider these strategies when negotiating a new carriage agreement. But they are clearly page one in Dish’s playbook. The company will do whatever’s necessary to avoid paying what it believes are excessive fees, even if it means inconveniencing subscribers for a period of time.
2. Dish has focused more on building a subscriber base in rural areas, which are more dependent upon satellite service for multi-channel television. High-speed Internet, and cable TV service, is often not available in rural areas. So many residents there need Dish, or DIRECTV, because they can’t take advantage of the expansion of streaming services such as Netflix, YouTube TV and Hulu. Consequently, they are less likely to cancel Dish during a carriage dispute; they have to hang in there because they have few attractive alternatives.
Plus, like DIRECTV, Dish requires a two-year contract which comes with an early termination penalty of $20 a month for every month left in the agreement. That also makes it less likely for Dish subscribers to cancel during a fee fight. (Update: (Dish in July reduced its fee from $20 a month to $10 a month for new customers.)
For those reasons, and others, I suspect the Dish-Nexstar dispute to last for weeks, if not months.
Claire, wish I could be more optimistic. Happy viewing, and stay safe!
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