Cable disputes can strengthen telco-broadcaster bonds

Telcos with ambitious TV service strategies have long lamented their weak ties to the broadcaster community. It's one area in which cable TV incumbents continue to have the upper hand. Part of the reason, of course, is that IPTV and other telco TV offerings are still in their infancy. Only one telco in the U.S. and only a handful around the world have 1 million or more TV subscribers.

Part of the solution is for telcos to concentrate on wooing broadcasters with better deals and pricing arrangements for their content. Trying to get them to invest in the future of telco TV may not necessarily work well at this early stage, but lining their pockets with more money certainly will.

On a related theme, telcos may be able to gain when broadcasters have contract disputes with cable TV firms. Last fall, the new Big Ten Network became embroiled in disputes with several cable TV companies when it was unable to reach carriage agreements with them. Those disputes kept the BTN off those cable networks in some markets until just recently, when Comcast, Time Warner Cable and Charter Communications finally reached separate agreements with the BTN. However, many subscribers to AT&T's U-verse TV service and Verizon Communications' FiOS TV service were able to enjoy the BTN last fall, when both telcos leaped at the opportunity to offer the BTN on their systems.

This fall, another local-level dispute has left one broadcaster recommending telco TV over an incumbent cable TV offering. Broadcaster LIN TV, which owns 15 local TV stations affiliated with national TV networks, has been at odds with Time Warner Cable because the cable TV firm has balked at a per-customer subscriber fee that LIN TV wanted as part of its re-transmission deal. As a result, LIN TV began recommending competing TV providers to its viewers, including Verizon's FiOS service. Verizon was among providers who had agreed to LIN TV's terms.

It's not clear how much telcos can gain from such disputes, which may often occur at a regional or very localized level, but in the effort to woo broadcasters, every little bit helps.

The latest move in the LIN TV dispute also raises another issue. TWC recently took a swipe at LIN TV by advising its subscribers to go online to watch LIN TV programming, rather than watch the LIN TV channels that TWC was re-transmitting. Sending customers online seems like a petty scheme to resort to, and one that affects cable TV viewership in the long run. But if gives any indication of how serious such disputes can become, Telcos should take note, because even as they begin to forge better relationships with broadcasters, they should think about how they will one day respond to the same sort of situation.

-Dan

For more:
- see this post at The New York Times

Related articles
Charter recently scored a deal with the BTN
Verizon picked up the BTN in August 2007

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