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Cable Blackouts Growing More Common, Even If Subscribers Get Angry

Among media companies, “going dark” was once a matter of last resort. Now it’s an option that is seeing more light.

CBS is not currently available on DirecTV or AT&T’s U-verse, the result of a battle over how much the two outlets’ owner, AT&T, ought to pay for the right to send CBS into millions of subscriber homes. The schism between the two companies, which cracked open early Saturday morning, is just the latest example of TV network and TV distributor finding themselves at odds at a moment when the industry is scrambling to lock in reliable streams of cash.

The CBS-AT&T feud marks the third blackout of programming in the past two weeks, according to the American Television Alliance, an advocacy group representing cable and satellite distributors – and the 213th overall in 2019.

Compare that figure to the number that took place in 2010 – a mere eight. Over the course of nearly a decade, that’s a rise of 2,562.5%.

Blackouts don’t make fans of TV viewers. They send cable and satellite subscribers racing to consider alternate services and technologies, and depress the audience levels TV networks depend upon to set advertising rates. And yet, consumers in various parts of the country navigated through 213 of them in 2017, and 164 last year. Why is their use on the rise?

The answer: More viewers are embracing new ways of getting their TV favorites. And they often do not involve watching an episode of, say, “Young Sheldon” or “The Good Place” when it first airs at a specific time and date. Some viewers would rather pay for Hulu or Netflix, and blaze through multiple episodes of “Modern Family,” “Grey’s Anatomy” or even kiddie fare like “The Thundermans.” That makes the task of discussing audience levels infinitely more complex – particularly for advertisers, who need mass viewership at specific dates and times if they are to make a go of a big weekend sale, a movie opening or limited-time hamburger promotion.

If getting top dollar from Madison Avenue has grown more difficult, then media companies are forced to rely more heavily on the retransmission fees they get from cable and satellite operators. Who would turn this stuff down? You sign a three-year deal with Comcast, Cox or DirecTV and then open the bank account to collect a stable stream of revenue that doesn’t waver unless there’s a major business shift, like losing a major program or shutting down a cable network.

Coming to the terms that would keep the money flowing, however, has become much more difficult. In the case of CBS and AT&T, for example, AT&T balked at a deal calling for higher prices without gaining the ability to sell its customers access to the “CBS All Access” streaming-video service. CBS, meanwhile, said its most recent deal with AT&T “is nowhere close to today’s fair market terms for CBS content – to which AT&T’s competitors have repeatedly agreed.”

Other battles are already in process.  Dish is currently enmeshed in a squabble with Meredith Corp, which operates 17 stations in about a dozen markets that came off the satellite broadcaster a few days ago as part of a contract renewal dispute. AT&T is also bickering with Nexstar, whose stations have not been available on AT&T platforms since July 4. And Dish subscribers have not had access to AT&T’s HBO or Cinemax in months.

More conflict looms. Dish is in late-stage talks with Walt Disney over carriage terms for the various FX and National Geographic cable networks, which Disney recently acquired from the former 21st Century Fox. Dish is also negotiating with an interim team of executives overseeing various regional sports networks as well as the YES Network Disney bought as part of that acquisitions and is about to sell to various parties. And Dish faces a deadline to make a new deal with Fox Corporation to carry such popular networks as Fox Broadcasting, Fox News Channel and Fox Sports 1.

Washington takes a dim view of blackouts, believing that they turn TV consumers into pawns in much bigger battles between suppliers and distributors. They are not wrong. But in the current era, when getting paid for content has become a trickier feat to accomplish, viewers may have to get used to either paying to stream their TV shows via broadband – or doing without them.

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