The DirecTV-Viacom dispute that temporarily blacked out channels has been resolved, but recent channel-carriage disputes look to be the tip of the iceberg, as content providers — including the broadcast networks — wrestle with distributors over fees and concerns about streaming video.
When these skirmishes burst into the open, they become battles for the public’s heart and soul, leaving cable or satellite operators, or other multichannel video program distributors, at a distinct disadvantage: While networks can dangle the specter of missing programs people love, the MVPDs have a more problematic image — they’re the guys who jack up consumers’ bills, screw with their service, and ask them to wait for servicemen who always seems to show up at the late end of the agreed-to four-hour window.
It’s the PR equivalent of bringing knives to a gun fight.
Admittedly, the overall stereotype isn’t entirely fair, and the notion of cable as an unfeeling monopoly has been shaken, as phone companies, satellite and other alternatives vie for the MVPD business. Moreover, the threat of “cord-cutting” — that is, dumping service entirely — has yet to materialize in great numbers, indicating people remain relatively sanguine about the status quo.
Operators, meanwhile, are doing all they can to be more lovable — touting more channels, better picture quality and more convenient ways to record favorite shows, including watching them on the go.
Nevertheless, they’re having a hard time closing the deal. Grumblings about rising bills and questionable service take a toll. And because the check gets written to the cable or dish company, they’re the ones more likely to be perceived as gouging consumers, even if network demands for higher subscriber fees put upward pressure on the final total. It seems clear monthly rates can’t go much higher without prompting more people to contemplate their options, meaning something’s got to give.
According to the Federal Communications Commission, complaints processed by its Consumers & Governmental Affairs Bureau spiked about 30% for first-quarter 2012 vs. the previous period — admittedly a blunt instrument to illustrate discontent, but billing and rates regularly account for one-third or more of the gripes.
So when DirecTV CEO Mike White taped a video message accusing Viacom of trying “to force you to pay substantially more for all their networks” — insisting his company’s primary aim is “to keep your monthly bill as low as possible” — that probably sounded unpersuasive to “The Daily Show” fans who wondered, “If they want more, why can’t you make a little less?”
Truth be told, consumers aren’t particularly sophisticated about the workings of the media business. If they’re paying $100 for monthly service, they want the channels they watch, and it’s up to the MVPD to provide it, never mind the details.
In that regard, an upscale tennis fan has scant sympathy for Comcast, which — in losing a Federal Communications Commission decision compelling the cable giant to add the Tennis Channel to its lineup — argued the ruling will “drive up programming costs” and enrich the independent network’s “wealthy investors.”
Even media outlets consistently couch carriage standoffs in program-centric terms. “Dish subscribers could lose ‘Mad Men’ in dispute,” read a Reuters headline, reflecting an assumption that more readers could identify the Emmy-winning drama than its network, AMC.
If cable/satellite/phone operators are putting on a brave face, signs of apprehension and bet-hedging can be seen in their actions.
Virtually every one of them has made programming investments designed to strengthen their connection to consumers, from original series on DirecTV’s Audience Network (currently airing “Damages,” the FX castoff) to Time Warner Cable’s plans to launch regional sports networks anchored by the Los Angeles Lakers to, most dramatically, Comcast acquiring control of NBC Universal.
Such maneuvers underscore the realization that while these companies have a relationship with consumers, it’s in the same role as a utility — the kind acknowledged only when the lights go out or something else goes wrong.
The ultimate lesson for content distributors is that people bond with specific content first, followed by well-defined channels. Comparatively, distributors are hardly the life of the party, more like just the guy holding the door.
Operating cable systems or satellite services once looked like licenses to print money, and they’ve exhibited considerable resilience amid premature forecasts of their obsolescence. Like other established media, though, steady growth from their core business doesn’t appear sustainable, which means they’ll need to be more nimble going forward.
So even if these companies “win” a few carriage fights in the short term, they need to be wary that the media waters are treacherous these days. And if MVPDs really expect consumers to embrace them as noble heroes holding the line on pricing, by the time someone yells “iceberg,” it’ll probably be too late.