The Federal Communications Commission has voted along party lines to proceed with its proposal to require cable and satellite pay TV providers to provide rebates to consumers for programming blacked out during retransmission consent-related disputes.

Democrats billed the move as a consumer-focused effort to preserve viewers’ access to programming they have paid for through their cable or satellite subscription, while Republicans called it a form of rate regulation and of using the FCC’s authority to regulate customer-service issues in a marketplace where viewers have plenty of video alternatives — notably streaming services — if they are unhappy with the way cable operators or broadcasters do business.

The FCC has approved a notice of proposed rulemaking (NPRM) on rebates, which means it is seeking comment on the proposal, after which it will decide whether — though more likely simply how — to implement the new rule.

Back in October, FCC chair Jessica Rosenworcel floated the proposal to put the onus on pay TV providers to inform the agency if a broadcast channel they carry has gone dark for an extended period due to a retransmission-consent impasse and to refund subscribers for those extended blackouts.

Her goal, she signaled, was to use the FCC’s power to put an end to blackouts.

The NPRM seeks comment on requiring MVPDs to notify viewers of any blackouts lasting more than 24 hours and mandating customer rebates for those interruptions. It seeks input on whether and how cable and satellite operators would provide the rebates, and whether to require pay TV providers to notify the FCC via an online public portal after a blackout has gone on for more than 24 hours.

Broadcasters argue that those blackouts are an unfortunate consequence of a marketplace negotiation in which pay TV distributors are reluctant to sufficiently compensate them for their high-value programming. Many MVPDs have countered that those blackouts are 1) the result of broadcaster bad-faith bargaining; 2) anti-consumer; and 3) not in the public interest, which broadcasters are licensed to serve.

Cable operators are under no obligation to carry TV stations unless those broadcasters elect to forego any compensation in exchange for carriage under the FCC’s must-carry rules. Stations who believe their content is sufficiently valuable to warrant compensation can negotiate for payment, but if they can't get a deal they cannot then assert must-carry rights.

As a result, when TV stations and MVPDs fail to come to terms on retransmission fees, those stations can withhold their signals until a deal is struck. Sometimes those blackouts can last days or weeks. That often leads to viewer complaints, particularly when things like coverage of local pro or college sports teams are affected.

Though broadcasters say taking their signals down when a contract expires without a deal is part of that marketplace negotiation, Rosenworcel clearly sees it as an unfairly anti-consumer practice.

“Enough,” Rosenworcel said in a statement. “When consumers are saddled with a blackout like this, I think they deserve a refund. They should not be asked to shell out for programming that they were promised but are unable to watch. This rulemaking is about fairness."

Republican commissioner Nathan Simington, in his dissenting statement, said the FCC lacks the authority to impose the rebates and should not do so even if dies have the authority.

Simington argues that a rebate won’t save consumers any money because of how it changes — he would argue “distorts” — the marketplace dynamic. 

Federal Communications Commission chair Jessica Rosenworcel is proposing to put the onus on cable and satellite operators to inform the agency if a broadcast channel they carry has gone dark for an extended period due to a retransmission-consent impasse and to refund subscribers for those extended blackouts.

Rosenworcel has circulated notices of proposed rulemakings (NPRMs) to that effect to her fellow commissioners.

If approved, the notices would seek comment on rules requiring multichannel video programming distributor (MVPD) notifications of any blackouts exceeding 24 hours, and mandating rebates to customers for those disruptions. 

Cable operators are under no obligation to carry over-the-air TV stations unless those broadcasters elect to forego any compensation in exchange for carriage under the FCC's must-carry rules.

When TV stations and MVPDs fail to come to terms on retransmission fees, those broadcasters can withhold their signals until a deal is struck. Sometimes those blackouts can last days or weeks. That often leads to viewer complaints, particularly when they impact things like coverage of the pro or college sports teams.

Such blackouts are a form of leverage in what is a marketplace negotiation, but Rosenworcel clearly sees blackouts as unfair to consumers.

“Enough with the blackouts,” Rosenworcel said in announcing the NPRMs. “When consumers with traditional cable and satellite service turn on the screen, they should get what they pay for. It’s not right when big companies battle it out and leave viewers without the ability to watch the local news, their favorite show, or the big game.  If the screen stays dark, they deserve a refund.”

The NPRMs seek input on whether and how cable and satellite operators would provide the rebates and whether to require those MVPDs to notify the FCC via an online public portal after a blackout has lasted more than 24 hours. 

“Every blackout — every single one — is caused by the same thing: broadcasters want consumers to pay higher prices,” the American Television Alliance (ATVA), whose members include cable and satellite operators, said. 

“We appreciate the commission’s acknowledgment that blackouts are a problem,” ATVA spokesperson Cora Mandy said.“However, we’d like to see the focus on the broadcasters — who increased retransmission consent fees from $200 million in 2006 to $11.7 billion in 2019, an unbelievable 5,359% — rather than just on the companies that are negotiating to keep prices down for their customers. We look forward to working with the commission to advance proposals that ensure broadcasters carry out their public-interest obligations so that blackouts can be avoided altogether.“

Consumer Reports senior policy counsel Jonathan Schwantes said: “CR applauds Chairwoman Rosenworcel for announcing these pro-consumer initiatives today. One of the biggest harms facing consumers in the video marketplace is the prevalence of blackouts. When two major companies fail to reach a deal, consumers are left without being able to access the content they paid for. 

“On one side is a broadcaster or media conglomerate, and on the other side is a video distributor, which in most cases is a cable or satellite television provider,“ he added. “We are pleased to see that the FCC is working to hold cable and satellite providers accountable to ensure that consumers get what they pay for."

Before he got distracted by his current fight for survival in the retail wireless business, Dish Network chairman Charlie Ergen spent a lot of time chest-thumping in the pay TV carriage wars, telling the programming community that when he blacked out a channel he was prepared to walk away for good.

And in recent years, Dish made good on some of Ergen’s threats, notably tossing regional sports network Bally Sports to the curb in 2019. If you’ve observed the recent wide-ranging collateral damage caused by the subsequent bankruptcy of the Sinclair Broadcast Group subsidiary that manages Bally Sports, then you understand how fateful and impactful Ergen’s decision was. 

Also Read: ESPN, ABC and 24 Other Disney Channels Blacked Out for Charter's 14.7 Million Spectrum Pay TV Customers

Major League Baseball, the National Basketball Association and the National Hockey League are all currently scrambling to figure out ways to make money from local TV sports amid Bally Sports’s floundering.

So how broad-reaching will the impact be if Charter Communications, which has around twice as many pay TV subscribers as Dish (14.7 million vs. 6.9 million), decides not to try to bring back the biggest sports channel of them all, ESPN?

Well … double it. And add 30. 

There is no precedent for what Charter now seems prepared to do. But in the early hours of Friday morning, less than 12 hours after it took down ESPN, ABC and the rest of the Disney cable TV universe in a carriage dispute, Charter held a conference call, during which it made it clear that this isn’t blackout business as usual. 

“Charter seems genuinely willing to walk away from Disney, and even the entire linear video model, if necessary,” MoffettNathanson principal and senior analyst Craig Moffett wrote shortly after the cable company’s virtual meeting.  

Observed Moffett: “They even titled their ‘impromptu’ conference call this morning: The Future of Multichannel Video: Moving Forward, Or Moving On.“

Sure, Charter’s morning presentation included typical rhetorical phrases like “drawing a line in the sand” against skyrocketing program licensing costs. 

But consider Charter’s actions. Beyond the immediate disruption to college football broadcasts — a big Utah-Florida game on ESPN was the first contest to get blacked out — the first NFL action on ESPN to be impacted by the Charter blackout will be the highly anticipated season-opening Monday Night Football contest between the Buffalo Bills and New York Jets on September 11.

Besides being Aaron Rodgers’s first game as a Jet, this is a matchup that features two Charter franchise markets. 

What’s truly interesting: According to Moffett, Charter is setting up a QR code that takes its pay TV customers directly to signup pages for virtual pay TV services Fubo and YouTube TV, which do carry ESPN. 

(Not surprisingly, Disney is trying to drive pay TV refugees to Hulu + Live TV, which it controls.)

Charter’s single-click destination will also help Spectrum video customers who choose these vMVPD options to downgrade their Charter service. 

“Forcing customers to pay for Disney content they opted out of, or don’t view and pay even higher rates, would negatively impact our connectivity relationships,” Charter said in its Friday morning presentation. 

Indeed, Charter no longer sees video as a means of profitability but rather a tool to drive its core internet connectivity business. And at this point, it seems less concerned about preserving its remaining pay TV bathwater than the “baby” of mobile and wireline broadband connectivity. 

As for Disney, which is openly planning its migration of ESPN to direct-to-consumer streaming, it faces a pricey multibillion-dollar renewal negotiation with the National Basketball Association with the possibility that its affiliate budget could suddenly come in about $2.2 billion lighter. 

“Programmers are caught in a self-imposed dilemma as they have moved content to their DTC products for short-term profit maximization and their management teams are not incentivized to drive business for the long term,” Charter’s presentation added.

Moffett has already put a name on the virtuous cycles degrading the pay TV business: “doom loops.” 

For its part, Charter seems to understand the “doom loop” sequence quite well, and it's more concerned about it leaking into connectivity, which is itself challenged by disruptive technologies liked T-Mobile's fixed wireless service. 

Here at Next TV headquarters in mid-city Los Angeles, this weekend exchange on Nextdoor validates Charter's concern. 

Cox Media Group stations in nine markets have been blacked out to Dish TV subscribers because of a retransmission fee dispute, effective Monday.

Dish said that one issue is Dish is allowing subscribers to opt out of local stations as part of their pay-TV service. Dish says Cox wants Dish to pay fees for those customers.

Dish also said that Cox is looking for an "exorbitant rate increase," and is negotiating for stations it doesn’t own yet.

The dispute affects Cox stations in Atlanta, Boston, Charlotte, Dayton, Eugene, Jacksonville, Orlando, Pittsburgh and Seattle. Cox Media Group is controlled by Apollo Global Management.

Also: Four Standard General Stations Blacked Out in Dispute With Dish

As the year comes to an end, carriage disputes usually become an issue as distribution deals expire. Over the weekend Fox warned that DirectTV subscribers could loose its stations and some of its cable networks when its distribution agreement with DirecTV Friday at midnight Pacific time.

In October, Disney's networks were blacked out on Dish for a day before a new agreement was reached.

"Cox's refusal to negotiate in good faith and subsequently forcing a blackout of its stations for Dish customers is deplorable," said Brian Neylon, group president of Dish TV. "Cox is demanding an exorbitant rate increase, negotiating for channels it does not yet own and insists on payment from customers who do not subscribe to local broadcasting, even as it continues to underinvest in local programming. Broadcasters like Cox put profits ahead of the public interests they are supposed to serve, even when its viewership has declined for years."

Dish noted that Cox’s viewership on Dish TV has significantly declined, Despite the decline, Cox is demanding rate increase of nearly 75%.

"We are deeply disappointed in Cox's decision to remove its channels from DISH after attempting to force an unjustifiable fee increase that directly impacts our customers," said Neylon. "We can't sit by and accept Cox's unreasonable demands. We will continue fighting on behalf of our customers to come to a fair deal that is beneficial for all."

On the website of Cox’s WSB-TV, Atlanta, the broadcaster says that “the satellite provider refused to agree to a fair deal for a new retransmission consent agreement.”  It urges viewers to call Dish to demand the return of local programming. “CMG is hopeful that Dish will abandon its well-worn path of blacking out TV stations to the detriment of consumers in favor of meaningful negotiations toward a fair deal.” ■

Fox on Sunday began warning viewers that DirecTV subscribers may be blacked out from its programming because the two companies have not yet been able to extend their distribution agreement, which expires Friday night (December 2).

Also Read: Cox Stations Blacked Out to Dish Subs in Retransmission Dispute

“Despite our best efforts for months, we regret that DirecTV continues to demand unprecedented special treatment that represents a wholesale change to our long-standing relationship and is out of step with marketplace terms,” Fox said in a statement.

Fox said the agreement would affect the NFL, the World Cup, the Big Ten championship game and local programming, including news on Fox-owned TV stations.

In addition to the broadcast stations, FS1, FS2, Big Ten Network, Fox Deportes and Fox Soccer Plus are covered by the expiring agreement. Fox News Channel and Fox Business Network will remain carried under a separate deal.

The current deal expires Friday at midnight Pacific time, which would be after the Pac-12 Conference Championship college football game.

DirecTV pointed the finger at Fox in a statement.

”At this point, any interruption of Fox programming depends solely on Fox alone,“ DirecTV said.  ”DirecTV has no intention to remove any Fox content. The best way for everyone to ‘Keep Fox’ is for Fox to keep making it available themselves. We’re working hard to reach an agreement to renew these Fox stations and national sports channels so customers can continue to enjoy them at a strong value. Based on our excellent track record with Fox, we’re confident we’ll come to terms ahead of any potential disruption. In fact, we’ve renewed nearly 200 local Fox stations much like these over the last few years.” 

The blackout would affect DirecTV satellite customers, DirecTV Stream viewers and subscribers to U-verse TV.

DirecTV noted that distribution disputes are not uncommon.

“Unfortunately, the same old, tired programmer scare tactics of putting customers into the middle of contract renewals tend to die hard. Fox invented this tactic back at the turn of the century, and has a long, long history of aggravating consumers to help try to boost their guaranteed rates, while most renewals are typically resolved without any interruptions. Just last month, Fox alerted Altice USA customers, only to settle without removing signals, while the same is true of other recent Fox renewals with Roku and the National Cable Television Cooperative, among others,” DirecTV said.

Also: DirecTV Asks Blacked-Out Stations To Return Signals Through Election Day

Fox said it remains committed to reaching a fair deal with DirecTV,

“Despite our best efforts for months, we regret that DirecTV continues to demand unprecedented special treatment that represents a wholesale change to our long-standing relationship and is out of step with marketplace terms,” Fox said. "While Fox continues to seek an agreement benefiting all parties, our priority is ensuring viewers’ ability to access all Fox Sports, Fox Entertainment and local Fox station programming.” ■

DirecTV is asking the 27 stations blacked out to its subscribers because of a retransmission consent fee dispute to return their signals through Election Day.

The satellite-TV company is offering to pay the stations whatever new rate winds up being negotiated retroactively to the return of the signals.

The stations cover about 4 million homes in 25 markets and are owned by Mission Broadcasting and White Knight Broadcasting.

DirecTV maintains the stations are operated by giant broadcaster Nexstar Media Group, and that Nexstar is playing a role in trying to secure higher rates for the stations.

“Despite DirecTV’s allegations, Nexstar is not a party to these negotiations and does not control any of these television stations,” Nexstar spokesman Gary Weitman said. ”These stations are owned by Mission Broadcasting, Inc., and White Knight Broadcasting, not Nexstar.” 

Also: Nexstar Stations Go Dark In Fee Dispute With Verizon Fios

Mission had no comment on DirecTV's request. “Mission has a long track record of negotiating fairly and avoiding service interruptions in our markets, and we don’t want viewers in our local markets to miss any college or NFL football, the World Series, World Cup, or the vitally important local news, sports, and weather coverage we deliver every day,” the company said in a statement a few days after the blackout began.

The White Knight stations went dark on DirecTV on October 7. The Mission stations went dark October 21.

“This is a critical time in American political life. We are less than two weeks from one of the most important Congressional midterm elections in American History, and gubernatorial elections in 36 states,” DirecTV said in a press release. ”The results of this midterm will have a profound impact on some of the most important political, public health and economic issues of our time.”

It is also an important time for political advertising.

DirecTV noted that during the early days of the COVID-19 pandemic, Mission and Nexstar were locked in a retransmission battle with Dish Network, but restored their signals to keep citizens informed about the health crisis.

“DirecTV now calls upon Mission and White Knight to return stations operated by Nexstar through the conclusion of the critical midterm elections while the parties continue to work privately toward a new agreement,” the release said. ■

The blackout of Nexstar Media Group stations in households served by Verizon Fios TV is putting $6.7 million in retransmission and distribution fees per month at risk, according to an analysis by S&P Global Market Intelligence.

Nexstar’s retransmission-consent agreement with Verizon Communications expired on Friday and the two sides were unable to reach an agreement on an extension.

The dispute impacts 14 full-power Nexstar stations in 11 markets. S&P estimates Verizon serves about 22.3% of the 11.3 million TV households in the market.

Also blacked out is NewsNation, Nexstar’s cable news network.

Kagan also estimates that in the second quarter, the affected Nexstar stations averaged $4.19 a month per subscriber in fees. Those fees are expected to go up in a new agreement. If Nexstar gets $4.25 per month, it would generate $79.4 million in revenue annually.

Nexstar advertising revenue is also in jeopardy, with both the midterm elections and holiday-shopping period approaching.

Kagan estimated the affected stations would generate $316 million in ad revenue in 2022, with $70.5 million coming from the blacked-out homes. That’s $5.9 million a month.

It is harder to estimate what Verizon Fios has at risk. The pay TV business is already declining at a precipitous rate and it’s hard to tell, even during football season, how quickly subscribers will pull the plug and switch to another provider.

But once a pay TV distributor loses a subscriber, it’s difficult to get them back, which puts pressure on cable operators, satellite companies and telcos during retransmission disputes.

In contrast, station ad revenue usually returns to pre-blackout levels shortly after a new distribution agreement is reached. ■

The Walt Disney Co. said it had reached a “handshake agreement” with Dish Network, ending a blackout of Disney programming that started early Saturday morning.

“We have reached a handshake agreement with Dish/Sling TV, which properly reflects fair-market value and terms for The Walt Disney Company’s unparalleled content,“ Disney said in a statement. ”As a result, we are pleased to restore our portfolio of networks on a temporary basis while both parties work to finalize a new deal.”

Financial terms were not disclosed.

Dish had complained Disney was seeking to increase the amount it pays for the media company’s programming by nearly $1 billion. Disney’s ESPN alone carries the highest carriage fee among cable networks, at more than $8 per subscriber per month.

The blackout came at a tough time for Dish: the middle of football season. Fans weren't able to see college games on Saturday on ESPN and faced the prospect of losing Monday Night Football until the agreement was reached. 

Also: ESPN Takedown on Dish and Sling TV Stirs Football Fan Revolt

Dish has been shedding customers who consider themselves sports fans by no longer carrying regional sports networks, another expensive programming source. It currently offers some packages that do not include ESPN and ESPN2, but said Disney was looking to force customers with those packages to pay for ESPN. 

The strength of ESPN and its football offerings appears to have played a part in the quick resolution of this heavyweight distribution battle. In a recent survey, more cable customers called ESPN a “must-have” channel than any other network.

In addition to ESPN, the channels affected by the blackout were the ABC Owned Television Stations in eight markets, the Disney-branded channels, Freeform, the FX networks, the National Geographic channels and BabyTV.

Dish is no stranger to carriage disputes. This week it ended a three-week blackout with Game Show Network. ■

The New Year rang in with a bit of a whimper on the retransmission consent front, with the American Television Alliance estimating that blackouts in 2021 — those periods when stations go dark as deals expire — were about one-third their number in the previous year. But distributors won’t have much time to celebrate, as the traditional deal cycle suggests that 2022 could be another record year for broadcast service disruptions.  

According to the ATVA, a trade group that represents satellite and cable companies, there were about 105 blackouts in 2021, less than one-third the record 336 stations that pulled their signal in the prior year and less than half the 278 stations that were blacked out in 2019. 

The lack of heated disputes as the clock neared 12 on Dec. 31 was in line with what Kagan, a research arm of S&P Global Market Intelligence, had predicted nearly 11 months prior. Back in February, the researcher had estimated that retrans blackouts would be lessened simply because there were fewer deals set to expire. According to Kagan, about 22 retrans deals affecting 30.2 million subscribers were expected to expire in 2021. That compares to 2020, when retrans blackouts affected about 56 million homes. 

Kagan based its predictions on the usual three-year timeline from the last public retrans transaction announcement or from earnings calls and investor presentations. Typically, broadcasters and distributors don’t reveal when a deal is up until it is, citing non-disclosure agreements embedded in retrans contracts. 

With that in mind, 2022 could see a big resurgence in retrans battles, as more deals are expected to enter the expiration queue. 

AT&T, which spun off a minority stake in its DirecTV, AT&T TV and U-verse TV units to TPG in February, struck several big retrans agreements in 2019 that could come up for renewal this year. Included in that mix are Nexstar Media Group, Sinclair Broadcast Group, CBS, Hearst TV and others that involved more than 300 stations alone. While it is no guarantee that all of those stations will go dark for some period this year, it’s a good guess that many will.

Other distributors who reached large retrans deals in 2019 include Comcast (with Nexstar and Tegna), Charter Communications (Nexstar and Tegna), Verizon Communications (Tegna, Nexstar and Cox Media), Suddenlink Communications (Tegna) and Frontier Communications (Nexstar). Dish Network reached a retrans deal with Meredith (now part of Gray Television) and Cox Media Group in July 2019. It is unclear as to whether the Meredith stations will fall under Gray TV’s retrans schedule.    

Also: No Cigar 

While there were fewer actual blackouts in 2021, several disputes that began earlier continued into the New Year. The largest is Tegna’s dispute with Dish Network, involving stations in about 53 markets that went dark on Oct. 6. Both sides have accused the other of negotiating in bad faith, and there was no indication at press time that a resolution was near. 

Verizon Fios TV customers lost access to Tegna stations in about five markets on Jan. 4, after the parties couldn’t renew their retrans agreement, which was originally scheduled to expire on Dec. 31, 2021. 

Also: AT&T and TPG: There is No Why 

Many of the bigger retrans disputes in 2021 took place at the beginning of the year and were resolved in the subsequent weeks and months. Dish Network reached a long-term carriage deal with Sinclair Broadcast Group’s 144 stations in November, but the broadcaster failed to reach an agreement for its regional sports networks. The Sinclair stations never went dark to Dish customers during those negotiations — the original deal was set to expire in August — because of a series of short-term extensions offered by the broadcaster. 

Almost exactly one year ago, Cox Media Group resolved a 20-day retrans blackout of its stations to Suddenlink subscribers, and in February last year Cox Media settled a five-day blackout with AT&T, getting its stations back in front of DirecTV, U-verse TV and AT&T TV customers mere hours before the start of the Super Bowl.

Also: New Year Ushers End to Several Cable Networks 

On the streaming side, YouTubeTV avoided a prolonged blackout of Disney channels by hammering out a deal with the entertainment giant that brought back broadcaster ABC‘s owned stations and cable channels ESPN, FX, Disney Channel, National Geographic and Freeform after a 36-hour hiatus. YouTube had promised its subscribers a $15 one-time credit to their monthly bill if a Disney blackout occurred, a pledge the company said it would still honor.   

The Google-owned streaming service also reached a carriage deal with NBCUniversal in October, avoiding a blackout. 

In the meantime, YouTubeTV and Hulu Live+ TV are still locked in a carriage battle with Sinclair’s Bally Sports Network RSNs, which went dark to those streamers in October 2020. 

Regional sports channel MSG Network hammered out a deal with Verizon’s Fios service on October 6, while its ongoing fight with Comcast, which began earlier in the month, raged on. At press time, MSG was still off Comcast systems.   

Dish dropped RSNs Root Sports Network and AT&T Sports Network in September.  Three months later it dropped its final RSN -- New England Sports Network -- making Dish the only major MVPD without a regional sports network. 

In July, Dish and HBO ended their three-year carriage battle, while earlier that month ViacomCBS struck a carriage deal for its linear and streaming networks with Charter Communications. In June, Charter struck a separate carriage deal with Multicultural News Network while Verizon signed on Black News Channel that same month. 

In January 2021, CMG struck a retrans deal with Suddenlink, while Fios averted a blackout of Hearst TV channels by hammering out a deal at the beginning of last year. 

So it isn't all doom and gloom when distributors and broadcasters make their ways to the negotiating table, and it seems the likelihood of a deal getting done without a  disruption in service is increasing. At the same time, the threat of a blackout is sometimes a broadcaster's only negotiating leverage, and most aren't afraid to use it.   

Broadcasters and distributors have been playing the blackout game for years. And though the decline in pay TV subscribership and the increase of direct-to-consumer offerings that include broadcast fare could eventually eliminate the need for these disputes — or maybe someone will invent an antenna-like device that will allow consumers to capture broadcast signals over the air for free — chances are that’s going to take a few years to fully play out. Until then, consumers, distributors and programmers will just have to deal with their retrans agita. ■

While the end of the year appeared to be pretty quiet on the retransmission-
consent front with only a few disputes ongoing in 2021’s first week, 2020 was another record year for blackouts, as 336 broadcast stations went dark to pay TV customers vs. 278 in the prior year, according to industry group the American Television Alliance. 

In a statement, ATVA said the broadcast industry’s use of blackouts as a negotiating tool, especially during a pandemic, was outrageous and reiterated its call for regulatory reform. Whether that will come in a new administration with obviously bigger concerns is anyone’s guess. 

Retrans revenue has become an important part of broadcasters’ bottom lines, and the industry has long said its content has value to distributors that far exceeds the fees they pay for that content. 

Either way, retrans revenue is expected to continue to rise, albeit at a slower pace than in the past. According to Kagan, a unit of S&P Global Market Intelligence, retrans fees were expected to increase by about 2.5% to $12.2 billion in 2020, rising 5.7% to $12.9 billion by 2023.

Blackout periods in 2020 ranged from just two days (Hearst Television’s Jan. 3- 5 dispute with DirecTV involving about 25 stations) to the 59 days (Jan. 18 to March 16) that Dish Network customers were without 18 stations in New York, California, Louisiana, Mississippi, Idaho, Oregon and Washington owned by Northwest Broadcasting.

As far as ongoing disputes, most were limited to smaller pockets of the country.

At press time, Mediacom Communications, which negotiated a successful retrans deal with Gray TV stations in 35 markets on Dec. 28, was still in talks with Tegna, which darkened 16 stations in 19 markets including Davenport, Iowa, and Decatur, Alabama, to the cable company’s customers on Dec. 31. Three stations owned by GoCom Media in Central Illinois went dark to Cable One customers in that area on Dec. 31. Those stations, WSRP/WCCU (Fox) and WBUI (The CW) in Springfield, were still unavailable as of Jan. 7. 

Also on Dec. 31, Alaskan cable operator GCI lost access to ABC, Fox and The CW stations owned by Vision Alaska and Coastal Television. In a statement, GCI said it continues to negotiate with the stations for their return, but added the broadcasters are asking for “a 40% rate increase that is not the best outcome for GCI and our valued TV customers.” 

Capitol Broadcasting darkened three North Carolina stations — WRAL (NBC) and WRAZ (Fox) Raleigh-Durham and independent WILM Wilmington — to Dish customers on Dec. 31.

There are also a couple of deals pending. Cable One is facing a deadline of Jan. 11 to reach a retrans agreement for WICD, Sinclair Broadcast Group’s ABC affiliate
in Champaign/Urbana, Illinois; and Cox Media Group said six of its stations in
Tulsa, Oklahoma; Memphis, Tennessee; Spokane, Washington; Eureka, California; Greenville-Greenwood, Mississippi; and Alexandria, Louisiana could go dark to Suddenlink Communications customers “soon.” Talks between both parties were ongoing at press time. 

In a press release, Cox Media, owned by private-equity giant Apollo Global Asset Management, was pretty vague, but seemed to be setting the stage for a fight.

“Rather than reach a fair and reasonable deal with CMG, Suddenlink may instead choose to adversely impact their customers,” the broadcaster said in its release. “Now, more than ever, viewers need daily access to important and evolving information on the pandemic, and social and political issues.”

At press time, Suddenlink  parent Altice USA said it was in negotiations with Cox Media, adding that the broadcaster was demanding “higher rates than we pay any other broadcaster,” but seemed to hold out hope a deal could be reached. 

Charter-NBCU Deal Feathers Peacock 

Other larger retrans deals were made as the year progressed. Comcast’s NBCUniversal struck a comprehensive carriage agreement with Charter on Jan. 7 spanning its cable and broadcast networks, as well as an extended free trial for NBCU’s Peacock streaming service. Charter also agreed to distribute the Peacock app via its Spectrum guide in the future. 

Tegna darkened about 60 stations in 52 markets to AT&T’s DirecTV and U-verse TV customers on Dec. 1, but hammered out a deal with the satellite and IPTV services on Dec. 20. Dish Network weathered the loss of 164 Nexstar Media Group stations in 115 markets for about three weeks, eking out a deal Dec. 24.  The main sticking point of that negotiation, carriage of Nexstar’s WGN America cable channel, was settled, with Dish agreeing to carry the network on its Sling TV virtual MVPD in “early 2021.”

Comcast reached an agreement with Hearst on Dec. 15, a full 16 days before its deal officially expired, for stations in about 35 markets. Dish reached a retrans agreement with 14 Cox Media stations on Dec. 13, ending a blackout that had started back in July. Terms of all of these deals were not disclosed.  

Hearst TV also inked deals with Verizon Fios TV on Jan. 1 for stations in Baltimore; Boston; Harrisburg, Pennsylvania; and Pittsburgh. 

Denver area regional sports network Altitude TV is warning viewers that it may be dropped by Comcast, Dish Network and DirecTV if the channel can’t reach a favorable carriage renewal soon.

Altitude is owned by Kroenke Sports & Entertainment and airs games from the NHL Colorado Avalanche, the NBA Denver Nuggets, Major League Soccer's Colorado Rapids, the National Lacrosse League’s Colorado Mammoth and college sports from the University of Denver. On its website, the network warned that its deal with Dish Network expires at midnight Wednesday, while its agreements with DirecTV and Comcast end on Saturday.

Dish, the network said, has carried Altitude TV since its inception on Sept. 4, 2004. The other two distributors have carried the channel for 15 consecutive years, Altitude said.

[embed]https://twitter.com/AltitudeTV/status/1166770527249338369[/embed]

“These actions by Dish, Comcast and DirecTV are directly related to contract negotiations with Altitude, and while Altitude has always negotiated with them in good faith and continues to negotiate in good faith, these Big Three media conglomerates want to play by their own rules and are making unrealistic demands on Altitude,” the network said on its website. “Their actions will affect hundreds of thousands of regional sports fans and negatively impact hundreds of local businesses that continue to support their home teams.”

The blackout threat comes as Dish Network continues to be embroiled in a carriage spat with Sinclair Broadcast Group’s Fox RSNs, which went dark to its customers in July.

In a statement, Dish said it hoped it could reach an agreement.

“Dish’s goal is to keep Altitude Sports available to our customers at a reasonable cost,” the satellite TV service said in a statement. “We are unsure why Altitude has decided to involve customers in the contract negotiation process when there is still time for the two parties to reach a mutually beneficial deal.”

At Comcast, the cable operator focused on value.

“We want to reach an agreement with Altitude, but it must be at a reasonable price for our customers," Comcast said in a statement. "Altitude has demanded significant annual price increases for the same content for years, which has driven up costs for all of our customers in Colorado and Utah, even though most of them do not watch the channel. Over the past year, more than 95% of Altitude subscribers watched less than the equivalent of a game per week. The price increase Altitude is again demanding is unacceptable given the network’s low viewership. We have submitted a proposal to Altitude that we believe reflects the value of its programming and are hopeful Altitude will accept it so we can continue to carry the network for those customers who want to watch it.”

DirecTV is deep in retransmission consent disputes with two separate parties — Nexstar Media Group, and a group of 17 smaller stations. In a statement, the satellite TV provider confirmed that its deal with Altitude expires on Saturday, and hinted that if it can't reach a deal that makes sense for its customers, it may do without the network.  

"DirecTV has made a very fair offer to Altitude," DirecTV said in a statement. "We remain on the side of consumer choice and value, and our negotiations reflect that. Consumers have made clear they want more choice over the channels they pay to receive in their homes. Our goal is to offer Rapids, Nuggets and Avalanche games to anyone who wants them most at a value that makes sense to our customers overall. But we will not do bad deals on behalf of our customers, even if it means no longer carrying certain content."

Dish Network chairman Charlie Ergen dug his heels in the sand regarding the blackout of 16 Fox regional sports networks, telling analysts and reporters that it is possible a deal will never be reached.

The Fox RSNs went dark to Dish customers on July 26. 

In a conference call with analysts and reporters Monday to discuss Q2 results Monday, Ergen said although he wants to do business with the RSNs and their expected new owner Sinclair Broadcast Group, he may not be able to. 

Ergen praised Sinclair for its work on ATSC 3.0, adding that the two corporate cultures are similar.

“So, we hate to be in a position to not be able to carry a product that they are investing a large sum of money in,” Ergen said.

But that doesn’t seem to be enough to get the channels back on the air. Dish has complained that the RSNs are too expensive, while the programmers insist they are merely asking for fair value for their content.

Ergen continued that while his head may want to keep the channels, his nose tells him it’s not the right move.

“Because I'm emotionally involved, I want to keep them,” Ergen said of the Fox RSNs. “And my nose tells me, that's not the right thing to do.”

The longer the dispute drags on, the lesser the chances for a resolution, Ergen added, noting that after about one month without the networks, most customers will forget they ever had an RSN.

“I guess, the chairman saying it doesn't look good that the regional sports will ever be on Dish again,” Ergen said.

Ergen has made similar provocative statements in other carriage disputes, only to eventually strike a deal. Last year he said it appeared that the blackout of Spanish-language broadcaster Univision would be “probably permanent,” but hammered out a deal in March that restored the networks after nine months of darkness.  On the flip side, Dish subscribers are still without access to premium channels HBO and Cinemax after they went dark in November when their carriage deal expired.

Dish has had a spotty history with regional sports networks. In the New York market -- where one of the channels in the current dispute, the YES Network, resides -- Dish has never carried YES on its satellite TV service, only its Sling TV OTT offering. The other two New York RSNs -- MSG Networks and SportsNet New York -- went dark to those subscribers in 2010 and 2011 and have yet to return.

Dish reported better than expected pay TV losses in Q2 -- it lost a total of 31,000 customers, compared to the 151,000 it lost in the prior year. At its Sling TV service, subscribers rose by 48,000 in the period, while its satellite TV offering lost 79,000 customers, considerably fewer than the 192,000 it lost in the previous year and the more than 300,000 customers some analysts predicted it would shed. 

Part of that, according to analysts, could be that Dish is picking up subscribers who have fallen off promotional pricing offers from rival DirecTV. DirecTV lost nearly 1 million subscribers in Q2.

In a research note, MoffettNathanson principal and senior analyst Craig Moffett wrote that although it could be tempting to look at the subscriber results as proof Dish’s increasingly more rural subscriber base is getting stickier, the reality is their low price reputation probably was the main driver.

“If so, we are seeing more of a rebalancing of the two than we are a rebirth, Moffett wrote. “Still it is a glimmer of good news for a satellite business that, soon enough, won’t be the ‘core.’” 

With the NFL regular season scheduled to kick off on Sept. 6 and Major League Baseball nearing a weeks-long round of playoffs beginning Oct. 2 and leading up to the World Series on Oct. 23, a top lobbying group for the pay TV distribution industry warned fans that they should brace themselves for a flurry of blackouts from local broadcasters.

The American Television Alliance (ATVA), a Washington lobbying group consisting of top distributors including Charter Communications and Dish Network, said consumers should prepare for a blackout blitz in what is threatening to become another record year for retransmission consent disputes.

According to ATVA, there were 213 blackouts in 2017, breaking the previous mark of 193 in 2015. So far this year, there have been 83 blackouts.

ATVA said college and professional football games are the most frequently targeted and blacked out programming category, used by broadcasters as deal leverage to gain higher fees.

Broadcasters have long argued increases are necessary in many cases to ensure the ability to provide high quality programming. Earlier this year, the American Cable Association, which represents small cable operators across the country, predicted that retransmission consent fees would rise 88% by 2020, with its membership bearing most of the burden. The National Association of Broadcasters has pointed to data from S&P Global's Kagan research unit that shows that overall retrans fee increases have been declining in recent years. 

“The irony of ATVA lamenting infrequent loss of broadcast sports programming is especially rich in light of Big Pay TV’s never-ending blackout of Los Angeles Dodger baseball games that’s lasted nearly five years," NAB said in a statement. "Broadcasters have every incentive to keep our programming on pay TV platforms, as evidenced by the fact that 99 percent of all retransmission consent deals end without a disruption in service.”

Some specific examples from last season, according to the ATVA include:

• Northwest Broadcasting’s blackout of Charter Spectrum customers for more than four months, a period that included the NFL Super Bowl and NHL Stanley Cup, the 2017 MLB Playoffs, including the 2017 World Series Between the Los Angeles Dodgers and the Houston Astros; NFL Divisional Round Playoff matchups between the Seattle Seahawks and Atlanta Falcons; Pittsburgh Steelers and Kansas City Chiefs; and Green Bay Packers and Dallas Cowboys; The NFL’s Annual Thanksgiving Day Game between the Minnesota Vikings and The Detroit Lions. 
• Capital Broadcasting’s blackout of hometown fans in Raleigh, NC during a game between the NFL's Carolina Panthers and New Orleans Saints; pivotal college football matchups including a highly anticipated contest between the University of Georgia and the University of Notre Dame. 

“The TV blackout, or even the threat of one, is becoming one of the ugliest traditions in spectator sports, and it should end. Sports fans in particular are some of the most frequent victims of broadcaster blackouts, and as this crisis grows we’re afraid this year could be the worst we’ve ever seen,” said ATVA spokesman Trent Duffy in a statement. 

Broadcasters continued to eke out double-digit percentage increases in retransmission-consent revenue in the first quarter, despite mounting evidence that the pay TV universe is shrinking.

A look at some of the top broadcast station groups show that retrans revenue, while still rising at a healthy double-digit percentage clip, leveled off a bit from the triple-digit increases of a year ago. But overall growth at the top five publicly traded broadcasters rose a collective 25% in the period, slightly behind the 35% increases in the first quarter of 2015.

SCRIPPS LEADS THE CHARGE

Leading the charge was E.W. Scripps, which boosted its quarterly retrans haul 92% to $53.6 million, behind the 123.8% increase in the same period last year. Sinclair Broadcast Group — the largest station owner with 172 broadcast properties in 81 markets — maintained a high-single digit percentage increase in the period, although it told analysts those raises will taper off in the next three years as its deals mature.

Sinclair said its next big retrans negotiation will be at the end of the year, with Comcast, and it expects 2017 retrans increases to be in the mid-single digits, dipping to the low-single digits by 2018.

The company, which has been aggressively accumulating stations over the past five years — it had only 58 stations in January 2011 — will have some added leverage in retrans negotiations going forward. It agreed to purchase sports network Tennis Channel in January (the deal closed on March 1), adding to its growing stable of cable networks that include American Sports Network, Ring of Honor and Comet TV. While Tennis Channel had little impact on the first quarter — it had only been officially under the Sinclair umbrella for a month in the period — the network is expected to have influence in future negotiations.

The second-largest station owner — Nexstar Broadcast Group, with 104 properties in 54 markets — saw retrans revenue rise 46.2% to $97.3 million in the quarter, less than the 89.5% increase in the same period in 2015.

Of the top six station owners, all except Tegna, the former Gannett broadcasting group, reported a smaller percentage increase in Q1 2016 than in the prior year. That could be in part because of a declining pay TV subscriber base, as total pay TV customers fell by 1.2% in the quarter. But it is more likely tied to the timing of retrans renewals and overall market maturity. Tegna said it expected retrans to grow more than 30% for the rest of the year.

MVPDs reached several retrans deals with station owners in the first quarter, including Cox (with Nexstar), Time Warner Cable (with Scripps) and Dish (with Cordillera Communications), which likely had an impact on revenue growth. Most of those deals — except for TWC and Scripps — also included brief blackout periods, which one pay TV industry group believes has a huge impact on rates.

The American Television Alliance, a group that includes the traditional pay TV distributors such as Charter Communications, Cablevision Systems, DirecTV and Dish Network, said there were 193 blackouts in 2015 — a new record and more than twice the 94 blackouts in 2014. So far in 2016, 26 blackouts have occurred, and more are expected as deals come up for renewal, usually around major sporting and entertainment events.

The ATVA sees a direct correlation between blackouts and higher retrans fees, adding that oftentimes consumers are forced to pay higher rates after a dark period has ended.

“Each broadcaster’s quarterly earnings report is further confirmation that the retrans cash grab is driving the TV blackout crisis,” said ATVA spokesman Michael Hacker in a statement.

Back in July 2015, SNL Kagan raised its estimates for overall retrans revenue growth to $10.3 billion by 2021, a 63% increase from the $6.3 billion in 2015. CBS alone has said it will generate about $1 billion in retrans revenue in 2016, growing to $2.5 billion by 2020.

RETRANS TAKES UP THE SLACK

Retrans fees have been a savior for some broadcasters, taking up the slack in recent years as the advertising market has tanked. But even as ad sales have begun to rebound — Morgan Stanley media analyst Ben Swinburne said in a recent note that the first quarter was the strongest for national TV ads since Q3 2013, with broadcast advertising revenue up between 8% and 10% — retrans fees continue to rise.

While overall percentage growth appears to have slowed in the first quarter, Pivotal Research Group CEO and senior media and communications analyst Jeff Wlodarczak said it probably won’t last long, adding that it could simply be a result of the “law of large numbers.”

“As they keep getting bigger, the growth is going to slow,” Wlodarczak said. “I see broadcasters trying to push through higher fees on distributors to offset lost revenue from cord cutters/shavers, which will of course only exacerbate the problem.”