There is something not quite right about a single week where one major US broadcaster threatens to blackout Dish Network customers and another predicts it will reach a massively improved $2.5 billion of revenues from retransmission agreements by 2020.
NBC-U must feel very strongly that it wants a piece of the revenue which CBS is boasting about, but it is in a vastly different place to CBS. It was acquired by Comcast and although it is perfectly entitled to charge the going rate for retransmission of its channels on pay TV networks, it cannot be seen to be charging more than everyone else due to the delicate promises it made to regulators to take care in such deals.
Dish Network hit out, calling for the FCC to remind NBC-U of such promises, made in order to push the Comcast merger through, and it called for an official arbitration process. It’s all part of the rich and rather complex interplay in the US between pay TV operators and TV channel owners (networks). Comcast will always be accused of trying to hurt a rival pay TV operator by asking it to pay too much for its NBC-U content; and even when it is not doing that, it is a legitimate weapon for competitors to bring to the negotiating table.
What feels really wrong is the way CBS, a broadcaster working at arms-length from both pay TV operators and studios, has made no qualms about its success here. It has had a strong period of high TV audience market share; and it has bravely led on telling MSOs that not only will they have to pay more for their content, but that they cannot have the exclusive only rights to such content online – CBS All Access testifies to that, which this week executives said would bring in a further $800 million from OTT services over the next five years.
CBS COO Joseph Ianniello said that the retrans increase is partly due to out of home rights and said that another $800 million in OTT revenue will come evenly from CBS All Access and Showtime OTT, for which it needs to add about four million subscribers in the next five years. In content it is nice to know where next year’s revenues are going to come from.
Comcast is now standing in the CBS shadow. It could not have gone after such spoils itself as a pioneer, but now that CBS has done so, it is free to start negotiating the same types of deals, using CBS as an example of what’s fair. Its problem is that if it wishes to drive OTT deals, that would perhaps be against the interests of its parent – so it perhaps wants an unrealistic amount of growth purely from retrains deals, unless it decides to compete with Comcast and offer far more NBC OTT streams.
Dish put out a statement saying that “Based on NBC-U’s actions to date, Dish currently expects to file for arbitration, which would prevent NBC from blacking out Dish customers. Under the conditions imposed by the FCC and Department of Justice in approving the Comcast-NBCUniversal merger, NBC-U is forbidden from blacking out its networks if a pay TV provider chooses, in its sole discretion, to exercise its right for binding arbitration.
It is unlikely that arbitration will yield such a good deal for Comcast NBC-U as plain old financial muscle or as was had by CBS. By next week this dispute may well be history, but the continuing effect on NBC-U revenues will be with Comcast for the foreseeable future.