Updated at 1:30pm Eastern Friday to include comments from Hearst Television.
The war over retransmission fees has escalated into a battle of beliefs between Dish Network and Hearst Television, as Dish was “forced” to pull the plug just after Midnight Eastern today (3/3) on every Hearst VHF or UHF station it carries.
“Despite DISH’s offer to extend contract negotiations, Hearst Television has blacked out DISH customers’ access to its local channels in 26 markets across 30 states,” is how Dish is spinning its fees dispute with Hearst. The highly biased comments came just after midnight in a wide-distribution press release.
“The broadcaster has used the move to gain deal leverage as it seeks above-market rate increases nearly double the current DISH rate, and other unreasonable demands,” Dish asserts.
“Hearst has also refused DISH’s offer to match the rates paid by other pay-TV providers,” Dish adds. To add fuel to the fire, EVP/Programming Warren Schlichting noted that it’s the second time in 2017 Hearst is fighting a DBS provider, as competitor DirecTV sought to pay less retrans fees than Hearst sought for its stations, which are largely comprised of in-market leaders.
“While we are listening to customers and working on their behalf to keep their TV bills manageable, Hearst is again turning its back on its public interest obligations and using innocent consumers as bargaining chips,” Schlichting said.
He added that Dish was “willing to grant an extension and a retroactive true-up on rates,” and claims Dish and Hearst had been making steady progress in their recent negotiations.
Specifically, Dish offered ” a retroactive true-up when new rates were agreed upon.”
Dish explains, “The true-up would ensure that Hearst was made whole at the new rates for the period of any contract extension.”
Dish’s solution for effected subscribers? Hop on over to an electronics retailer for a next-gen pair of “rabbit ears” — a digital over-the-air antenna.
Schlichting says, “In the meantime, for some of our customers a simple indoor antenna can be a great way to receive these channels for free, over the air. We’ll work with our customers to find alternative ways to watch programming.”
Dish’s top lawyer also chimed in, and took the time to advocate for “Retransmission Consent Reform.”
“Hearst’s decision to cut ties with DISH customers is a prime example of why Washington needs to stand up for consumers and end local channel blackouts,” said R. Stanton Dodge, DISH executive vice president and general counsel. “Broadcasters like Hearst use their in-market monopoly power to put profits ahead of the public interests they are supposed to serve.”
Retransmission fees have become a key component of broadcast TV companies’ quarterly revenue estimates in recent years.
According to SNL Kagan, Dish says, broadcast fees were expected to reach $7.7 billion in 2016. This compares to $215 million in 2006. Retrans fees are expected to more than double, to reach $11.6 billion in 2022, Dish argues.
In a response appearing on its TV station’s websites, Hearst said it has “reached an impasse” in negotiating a renewal retransmission consent agreement for the carriage of its stations on Dish’s systems.
“While we had hoped to conclude our negotiations before the extended March 3 deadline, Dish has continued to insist on including material terms that are less favorable than our current agreement,” Hearst said, noting that it has made “significant investments to deliver top-quality programming” to viewers while assailing Dish for “seeking the right to carry our stations at below market rates, which is neither fair nor reasonable.”
Lastly, Hearst took aim at Dish by insisting it has not “blacked out” its stations. Why? It can continue to be received — just not on Dish.
RBR + TVBR OBSERVATION: Wanna’ fight, Dish? How’s this for a war of words: The solution for subscribers in Baltimore is to get a $23 antenna at Best Buy so they can get WBAL-11. Add in $35 or $40 and they can get DirecTV Now or YouTube’s brand-new “skinny bundle” or some other option. Then, for $10 more a month, one can get Netflix or Amazon Video or a premium OTT service.
While Dish and DirecTV satellites are still ubiquitous in many areas of the Miami DMA, where our main editorial offices are located, we see fewer in West Los Angeles, and in the areas closest to tech darling of the moment Snap Inc.
Dish’s future relies on growth of its digital Sling TV offering, and knows it. Yet it is twisting this fight in its favor and making Hearst the villain. We liken this to a StubHub scammer who gets concert tickets at $25 that are worth $49, only to then turn around and make money by selling water, soda and chips along with a non-negotiable $20 parking charge.
Yes, “over the air” signals are free to all. But, they are not free to companies that then take those signals and profit for them. That’s the whole point of retransmission fee agreements, and we hope the two parties reach a new agreement swiftly.