November 1 could be a very ugly day for DirecTV subscribers. That day is when over 20 News Corporation owned networks might be dropped from the provider’s channel lineup. It’s a terrible situation for subscribers and fans of those networks. Both sides have launched PR campaigns to woo the public although Fox seems to be winning that battle at the moment. Stuck in the middle are the viewers. In many cases, the viewers are loyal to both the channels and their providers, yet they are still getting screwed and now they don’t know where to turn and who’s to blame. It’s not pretty and that’s why so many people would love to see an ala carte system in place but in reality, the media companies don’t want it nor do the providers. I’ll write more about that a little later but first some background on this current carriage battle.
What makes this carriage battle so strange is that DirecTV and Fox have traditionally worked very close together and there’s a good reason for that. Fox’s parent, News Corp. owned DirecTV for a short period of time. Liberty Media later bought DirecTV through a stock swap deal as Liberty is a long tine partner and major shareholder in News Corp. In fact, Liberty and Fox were the original partners in FSN as Liberty sold a stake in their regional nets to bring that service to fruition. Liberty would also gain three regional sports networks (Root Sports) in that stock swap and would later spin them off into a new publicly traded DirecTV which included Root, DirecTV and a stake in GSN.
Even after that, the companies maintained close ties. DirecTV would go on to buy The Dan Patrick Show to air on their own channels. It was later syndicated to all Fox Sports Net affiliates. Root Sports continues to rely on FSN for much of their programming while DirecTV is a major advertiser on Fox Sports. To top it all off, the president and COO of Fox, Chase Carey, is the former CEO of DirecTV. Yet, even with all these close alliances, they are still fighting.
A common pet peeve for customers is that they pay for channels that they have little or no interest in. Bundling is the formal name for it and it’s something that all providers do but what most people don’t realize is that the bundling starts at the top. In this case, Fox is bundling virtually of their networks together in one carriage agreement. Using this strategy, less watched networks can gain higher carriage fees and better channel placement. It’s something that NBC plans on using to gain better carriage for Versus. But this strategy is one reason that customers pay more. Fuel TV is a very small network but its carriage is practically guaranteed because of bundling and that cost is passed down to the consumers.
The irony is that customers can now have a form of a la carte thanks to services like iTunes and Amazon. But many customers aren’t interested in paying for Sons of Anarchy that way. The majority of complaints from angry DirecTV customers stem from that show even though they could still watch it through other avenues. It seems they would rather pay more month to month even if they aren’t watching anything else on FX or any of the other channels involved in the carriage spat. That bundling may be expanded more as Fox News and Fox Broadcast agreements are up in a few months and they may be added in these current negotiations.
The most obvious way to get around this is switching to another provider, but why bother? A large number of people came to DirecTV because Fox had the same battles with three other providers. There aren’t any providers that don’t have carriage disagreements of some kind and the more people switch, the more you’re supporting Fox and its fellow media companies. Basically, customers give in and welcome the higher prices by constantly moving around. Thus, the media companies keep paying more for programming, passing the buck to the providers who then pass it to the consumer.
How do viewers win? The short answer is that they can’t. They are pawns on a chessboard. There is no way for a viewer to win in the end. Sure, customers might be able to score some credits from a DirecTV customer service rep but nobody likes to lose channels. Thanks to contracts and such, customers are probably better off sticking with their current provider and being by their side even if it means some short-term pain.
I don’t think DirecTV is totally innocent here but they aren’t any different from any other TV provider. If every provider and customer fought back, maybe the media companies would open their eyes and keep costs down for everyone. There’s no reason to bid so much for sports rights yet they keep doing it, competing against each other. At some point, that has to stop, but for now, viewers have to realize that this is the norm. There’s only going to be more battles in the future no matter whom their provider is.