Beyond Blackouts, Distribution Will Be a Key Issue in the New Year

Regardless of whether the usual year-end retransmission and carriage brinksmanship results in blackouts or settlements, 2017 is likely to be a bumpy year for TV distribution.

At presstime, Comcast-owned NBCUniversal was at an impasse with Charter Communications, now the third-largest distributor overall. Stations owned by Cox Communications and Hearst could go dark on AT&T and DirecTV, the No. 2 distributor, and Sinclair Broadcast Group was warning viewers about a blackout on Frontier Communications.

Money, of course, is at the center of most of these battles.

In a statement, NBCU charged that “Charter Spectrum has been unyielding in its demand for terms superior to those agreed to by the rest of the industry, including larger distributors.” If Charter pulls the plug, cable subscribers would lose NBCU programming ranging from Sunday Night Football to the latest travails of the Kardashian clan.

Charter grew in 2016 as it acquired Time Warner Cable and Bright House Networks. And it was aggressive in trying to get Time Warner’s lower programming fees applied to its own systems, resulting in lawsuits from Fox News and Univision.

The pressure on distribution will likely become more intense. With a growing number of consumers cutting the cable cord or looking at skinnier bundles, programmers are fighting to maintain their subscription revenue.

At the same time, distributors are looking for ways to serve consumers demanding lower-cost options. In December, AT&T rolled out DirecTV Now, a linear streaming service with a shockingly low price of $35 per month for more than 100 channels. That promotional offer is going away on Jan. 9, but costs will remain a key as DirecTV Now competes with new entrants from Hulu and YouTube expected to join the low-profit-margin fray.

Distributors are also looking for flexibility in bumping little-watched channels or expensive sports networks from packages.

One answer to the dilemma might be that if you can’t beat them, buy them. AT&T will be trying to complete its acquisition of Time Warner in 2017, which the carrier says will give it the ability to quickly roll out new mobile products. And perhaps serve as a model for the industry.

Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.