T-Mobile has come up with a short-term solution to address accusations from multiple TV programmers that its new TVision bundles violated distribution contracts — but the carrier’s headaches are far from over on the issue.
On Thursday, T-Mobile announced several “holideals” for customers. Among the offers: It’s adding 33 channels from Discovery, ViacomCBS, AMC Networks and Crown Media to its three TVision Live bundles for no additional cost.
T-Mobile says this is a “limited-time offer” and is positioning the lineup change as a special holiday-season gift to subscribers of the over-the-top pay-TV services. “We always go BIG during the holidays,” a T-Mobile spokeswoman said in an email, responding to a request for information about the promo. “This offer is all about giving customers even more this holiday season — just as all our holiday offers are.”
But in fact, T-Mobile is adding the 33 channels — the same ones in the $10-per-month TVision Vibe package — to the pricier tiers in order to come into compliance with its content distribution agreements, according to industry sources. Some of the programmers had threatened to take legal action.
“T-Mobile caved,” said a media executive familiar with the situation.
Shortly after T-Mobile launched the new TVision services on Nov. 1, Discovery and ViacomCBS were among the programmers that objected to the packaging of TVision Live and Vibe as violating terms of their distribution contracts. That’s because those specify that any channel in a pay-TV provider’s entry-level tier (i.e., Vibe) must be carried in higher-level tiers. “We don’t believe [T-Mobile has] the right to do what they’re doing right now,” Discovery CEO David Zaslav said on the Q3 earnings call earlier this month.
The T-Mobile rep declined to say how long the 33 Vibe channels will be available for no extra cost in the higher-priced TVision Live tiers (which are $40, $50 and $60 per month). Per one industry source, the Discovery, AMC, ViacomCBS and Crown Media channels will be carried on “100% of new and existing TVision subscribers” for the terms of their deals with T-Mobile.
Meanwhile, there are related disputes that remains unresolved with Disney, Fox Corp., NBCUniversal and WarnerMedia’s Turner. Those programmers, whose channels are omitted from the Vibe package, are insisting their basic channels must be included in the most broadly distributed tier (i.e., Vibe).
It’s not clear how T-Mobile plans to address the disputes going forward. The addition of the 33 Vibe channels to the TVision Live tiers clearly will push those into negative-margin territory, according to one industry exec. On T-Mobile’s own Q3 call, CEO Mike Sievert characterized TVision as a loss-leader designed to attract new phone and broadband customers. But the carrier may be unwilling to eat the costs of being forced to add channels to its different tiers at the current retail price points.
Ultimately, it could be forced to scrap Vibe — which at 10 bucks is arguably its most attractive offering — and winnow down the lineups in TVision Live. “They will eventually have to shut down the $10 package,” an industry source claimed.
How did T-Mobile think it could package the TVision services in this way without encountering pushback? The company touted the “un-carrier” move as “reimagining TV” to give customers greater flexibility and value. Contractually speaking, T-Mobile’s stance evidently was that Vibe and the more traditionally packaged TVision Live tiers are totally separate products, such that the tier-placement guarantees don’t apply to its family of OTT products. But programmers — and their legal teams — aren’t buying that.
Currently, T-Mobile is offering the new TVision OTT tiers to T-Mobile postpaid wireless customers and legacy Sprint customers. In 2021, it expects to widen that to be available to anyone in the U.S.
The 33 channels in TVision Vibe that are now included in TVision Live tiers are: AMC, Animal Planet, BBC America, BBC World News, BET, BET Her, CMT, Comedy Central, Discovery, DIY, Food Network, HGTV, Hallmark Channel, Hallmark Movies & Mysteries, Hallmark Drama, IFC, ID, MotorTrend, MTV, MTV Classic, MTV2, Nickelodeon, Nick Jr., Nicktoons, OWN, Paramount Network, Sundance, TeenNick, TLC, Travel Channel, TV Land, VH1 and WEtv.
Through Dec. 31, T-Mobile is offering customers who subscribe to one of the two priciest TVision plans (Live TV Plus or Live Zone) free access to Apple TV Plus for 12 months and a discounted Apple TV 4K set-top ($99 after rebate; it’s normally $179).
Separately, T-Mobile is phasing out the original TVision Home broadband-delivered pay-TV service as of Dec. 30. That’s the service originally launched by Layer3, the OTT startup T-Mobile bought for $325 million. The company is offering limited-time special deals to TVision Home subscribers to switch over to TVision Live TV or Vibe packages.