DirecTV and the owner of TV stations in Miami and Boston are in a standoff over fees the satellite provider pays to run broadcast programming, leaving tens of thousands of viewers unable to see shows ranging from “American Idol” to the NFL playoffs.
It’s the latest in a string of disputes across the country between cable and satellite companies and local stations over what are known as retransmission fees, which have risen sharply in recent years. One industry group said there were about 40 similar blackouts nationally in 2011 and more continuing this year.
“The networks are saying, `Affiliates, you should be getting value from the cable and satellite providers, and if you’re not, that’s your fault,'” Bill Carroll, vice president at Katz Media in New York, said Thursday.
In Miami, DirecTV viewers were unable to watch Fox’s premiere of “American Idol” on Wednesday and last weekend’s NFC playoff games because of the dispute between DirecTV and Sunbeam Television Corp. Sunbeam owns the Miami Fox affiliate and two stations in Boston, one of them the NBC affiliate that this year would carry the Super Bowl – possibly featuring the hometown New England Patriots.
“Usually, the best time to have this drama is when there is a big event associated with it that could cost viewership,” said Shari Anne Brill, a New York media consultant. “What better time to mess with it when there’s programming at stake and viewers get caught in the middle?”
Sunbeam decided Thursday to give DirecTV’s customers in Miami a break, announcing it will allow the satellite system to air Sunday’s NFC championship game between the New York Giants and San Francisco 49ers, as well as top-rated “American Idol” later that night and local news. Sunbeam’s station in Miami is WSVN.
“WSVN-TV is still negotiating with DirecTV, but we care about our viewers, and we want them to be able to watch this game, which will determine who goes to the Super Bowl,” said Robert Leider, WSVN’s executive vice president and general manager.
DirecTV spokesman Robert Mercer said it was the right move.
“We’re pleased that they’re doing the right thing for our customers and NFL fans and are looking forward to getting a deal done quickly,” he said.
The blackout has forced DirecTV subscribers to scramble to see their favorite shows and sports. Shari Rondon, co-owner of J.P. Mulligans Restaurant and Pub in Pembroke Pines, resorted to old-fashioned rabbit ear antennas to allow patrons to see football games last weekend. She could only use about four televisions, far fewer than normal, for the games.
“Everybody had to be huddled up. It’s inconvenient for customers, and it’s inconvenient for our staff,” she said.
DirecTV is accusing Sunbeam of greed, contending that it is seeking a 300 percent increase in the retransmission fee compared with the last contract. Sunbeam executives counter that they only want to update the fee to established market prices. The two sides have been negotiating off and on, but no breakthrough appeared imminent Thursday.
Leider called the 300 percent figure misleading, noting that DirecTV for years paid no fee.
The fees paid by cable and satellite providers to broadcast stations have risen from about $215 million in 2006 to an estimated $1.4 billion in 2011, according to a study by the SNL Kagan media research company. One reason, experts say, is that newer contracts between the broadcast networks and local affiliates give the networks a larger share of the fees.
“The networks have become more aggressive with their affiliates, and the stations have had to become more diligent in pursuing the fees,” Carroll said.
Cable and satellite providers are pushing back. They contend that outdated Federal Communications Commission rules enable local affiliates to hold them hostage, and some members of Congress have introduced bills that would end a rule requiring the providers to carry only local broadcast signals.
“They have found there’s a gold mine,” said Mike Heimowitz at the American Television Alliance, which represents many satellite and cable companies. “They are using the rules to extract more and more money.”
Brill, the media consultant, said she expects the DirecTV-Sunbeam dispute to be settled, possibly just in time for a playoff game or the Super Bowl. That’s what happened in a 2010 fee fight between New York’s Cablevision Systems and ABC, which ended just as the annual Academy Awards telecast got underway.
“They usually cave in at the last minute,” Brill said. “Consumers will wind up paying extra. That’s the moral of the story.”
Filed Under: Industry regulations + certifications