An on-going dispute between Norwegian operator Telenor and US content provider Discovery Networks has resulted in 13 of Discovery’s channels being cut from the Telenor-owned Canal Digital satellite and cable TV services.
Telenor claims that Discovery has unreasonably ramped up its prices, due to expensive rights for its Eurosport channel, whereas Discovery has accused Telenor of increasing subscription costs of its pay TV packages, without spreading the wealth. The two companies were unable to come to an agreement despite 18 days of negotiations, leaving 2.8 million Canal Digital Satellite and Kabel customers across Norway, Sweden and Denmark without channels such as TVNorge, Eurosport, Kanal 5, Discovery Channel, and TLC.
Telenor has fed the mass media in the Nordics with claims that it has a proposal for a solution to the fracas, but other sources claim this is untrue, as the operator is remaining stubborn in its negotiations.
Telenor’s OTT offering Canal Digital Go, which has around 1,963,000 subscribers in Norway, appears to have also removed all Discovery Networks channels from its website. Canal Digital Sweden, Elisa in Finland, and MTG’s Viasat have all been affected by the disagreement.
With Telenor apparently increasing Canal Digital prices by 30% since 2011, consumers will certainly be expecting a drop in pay TV subscription costs or some sort of compensation by bringing in some premium new content – but Telenor seems to rather frugal with its check book. We think a handful of customers will be cutting the cord unless Telenor pulls something out of the bag.
The Discovery Communications subsidiary charges a huge sum of money for its Eurosport channel, but this has been driven up by the increasingly competitive bidding wars for sports rights. Discovery paid $1.44 billion for most of the European broadcasting rights to the Olympic Games between 2018 and 2024, excluding UK and French rights for the 2018 Winter Olympics and 2020 Summer Olympics – Discovery and Eurosport will develop a dedicated Olympic TV channel across Europe. Discovery, whose largest shareholder is John Malone, also paid $1.7 billion for broadcaster SBS Nordic in 2012, and last year it acquired full ownership of Eurosport when it paid $535 million for TF1 Group’s 49% stake.
Canal Digital said it did not have permission from Discovery to further extend the deadline. “This is a sad day. We regret strongly that our customers currently lack TVNorge and the other Discovery channels. We are very disappointed that the US media group has chosen this drastic step. We continue to work hard to get the channels back as quickly as possible. In recent months we have negotiated with Discovery’s international leadership to reach agreement on a new deal. We’ve stretched very far in our efforts to reach an agreement especially for the Norwegian-produced channels that matter most to our customers. Discovery, however, put forward unreasonable demands for price increases of several hundred million kroner to cover up for their expensive purchases of various sports rights over the past year, far beyond what we think the channels are worth to our customers, says Ragnar Kårhus, CEO Canal Digital AS.
In a blog post TVNorge director Harald Strømme claimed that over the last five years Canal Digital had increased its prices by 30%. “Despite the fact that we have grown rapidly in recent years and invested heavily in Norwegian entertainment, our share of this has become less and less. So who is left with your money? All we want is that Telenor will pay for our content on the same level as other distributors. Can it be called unreasonable?” Strømme said the company was simply seeking the cost of a cup of coffee.
Discovery began taking online video seriously as early as 2012 when it acquired online video network Revision3, and last year it launched its Dplay OTT service in Norway, Denmark, Italy and Sweden – with the aim of reaching 1 million subscribers by 2017.
Discovery Communications has plans for its own OTT service in the US according to comments from the CEO David Zaslav during its results conference, likely to be similar to the Eurosport and Dplay apps launched in Europe, which he said had a couple of hundred thousand subscribers, and which would reach 1 million, next year, which he claims is all additive revenue. All he would say about the US is “we’re looking at it.”