On Monday evening, the Univision Communications PR team went into full tilt, notifying the world that “entirely without warning,” Verizon dropped all Univision stations from both its FiOs and mobile platforms at 5pm Eastern — the result of a failed negotiation on a new retransmission fee agreement, and Verizon’s unwillingness to further extend Univision’s old agreement.
Words were flung. The CEO of the National Hispanic Media Coalition chimed in.
Then, on Thursday, Verizon SVP/Public Policy & Government Affairs Kathleen Grillo entered the fray. She did so with a strongly worded letter to FCC Chairman Ajit Pai stating her company’s case, and defending its actions.
RBR+TVBR OBSERVATION (Full Text Below, for Members Only): Verizon FiOS … who actually subscribes to this service? Where does it even exist, and where it does exist does it have any customers that consume Spanish-language media? We snooped around. Millions are impacted by the loss of Univision’s channels … or are they?
In the letter to Chairman Pai, Grillo immediately turned defensive, while inserting some language straight out of the marketing department.
She says, “Verizon always seeks to provide its video customers with programming they value at a reasonable price. Indeed, as a competitive provider of video programming facing intense competition everywhere that we offer our Fios TV service, including from a host of new OTT and direct-to-consumer offerings, we have no choice.”
But then, Grillo hammered in on the key issue at hand, adding, “Unfortunately, in our current negotiations with Univision, we have not been able to reach an arrangement for continued carriage that meets these goals. Despite diligent efforts by Verizon over the last two-plus months to reach reasonable terms with Univision — and considerable movement on our own part during those negotiations — Univision has consistently insisted on unreasonable terms that would raise prices and harm our customers.”
Specifically, Grillo claims that Univision wishes to have Verizon “more than double its annual payments” to the Hispanic media company, “notwithstanding Univision’s reported declining viewership.”
That’s a pot-shot Comcast-owned Telemundo would transmit via one of their many press releases touting how they’ve closed the gap with Univision.
As of March 22, Telemundo claimed the No. 1 program, but Univision topped the week across the board in prime-time and among adults 18-49 — by margins that have continued to shrink since 2013. Today, Telemundo and Univision are nearly even, with Telemundo taking the slight edge. With the 2018 World Cup on the horizon and big prime-time offerings already in place, Telemundo looks to become the clear No. 1 in Hispanic TV.
That’s not to say Univision’s “declining viewership” is anything to sniff at. The network remains extremely dominant, in particular in markets with a strong Mexican and Central American population of first-generation immigrants.
A WHOPPING JUMP IN ITS RETRANS ASK
Univision sought empathy with the public in its statement confirming that its stations went dark on Verizon, assailing the provider for yanking its O&Os while wildfires in Northern California, and recent hurricanes in Texas, Florida and in Puerto Rico, likely impacted many Univision viewers.
But, as Grillo notes in her letter to Pai, Verizon began negotiating a renewal of its agreement for carriage of Univision’s programming on Aug. 3.
In Univision’s first offer, Grillo says proposed a price increase of more than 170% in the first year. “This would be like a gallon of gas going from $2 to $5.40 overnight,” she explains.
Such a move would have led FiOs customers to likely receive higher bills as a result of Univision’s demand.
“Because today we carry Univision’s broadcast channels on our basic tier to all Fios subscribers, accepting this offer would have required all of our Fios TV subscribers, regardless of whether they watch Univision, to pay more for their video service,” Grillo says.
Negotiations continued through September, and the parties continued to exchange offers.
“As the expiration of our contract approached at the end of September, Verizon proposed a one-month extension to allow for continued negotiations,” Grillo notes.
But, she adds, it was Univision that opted for a shorter 16-day contract extension.
This puts into contention whether or not Univision was caught off guard, with its stations removed “entirely without warning,” as it knew exactly when the contract extension was to have lapsed.
Did it seek another 16-day extension, however?
As Grillo explains, the parties met on Oct. 3, which saw Univision offer a deal that “included economics not materially different from their earlier offer.” Verizon made a counteroffer six days later. Univision responded with a new proposal “five hours before the expiration of the contract extension.”
What did this proposal revise from Univision’s previous offer? Not much.
“Disappointingly, Univision’s proposal essentially demanded the same unreasonable increase as their previous two offers,” Grillo notes. We understand and have sought to minimize any disruption for our customers and remain interested in reaching a fair deal with Univision. But reaching such a deal will require that Univision negotiate with us towards reasonable terms.”
ETHNIC EXCLUSION?
Is Verizon turning its back on Hispanic consumers?
Alex Nogales, CEO of the National Hispanic Media Coalition (NHMC) says that is what’s happening as a result of the impasse between Verizon and Univision.
In a letter to Verizon Chairman/CEO Lowell C. McAdam, Nogales noted that his organization “is outraged that at a time when catastrophic events have occurred in Mexico and Puerto Rico, Verizon has chosen to blackout Univision, the primary source of news for millions of Spanish-speaking and bilingual Latinos residing in the United States.”
Nogales then suggested that unless Univision stations were not restored while Verizon and the broadcast media company work out their differences, the NHMC would have “no choice but to rally Latino leaders across our nation against Verizon products and services.”
NHMC’s letter to McAdam was affixed to Univision’s online Public Policy microsite.
The impasse between Verizon and Univision affects all company-owned stations and the Galavisión and Univision Deportes Network pay-TV offerings. It does not include English-language Fusion TV.
Meanwhile, the war of words continues. Asked for comment on the letter to Chairman Pai from Verizon’s Grillo, a Univision spokesperson provided the following:
During the past week our viewers, political leaders, and community groups have spoken out about how important Univision’s networks and stations are for providing information and news to the Hispanic community, especially in light of recent natural disasters. We share their disappointment that Univision’s networks and stations are not available on Verizon. While Verizon unilaterally and without notice removed us from its systems on Monday evening after rejecting our proposal and extension offer, we remain committed to negotiations. We stand ready to review any fair proposal from Verizon that doesn’t devalue Spanish-language programming and dismiss the needs of its audience.
RBR+TVBR OBSERVATION: Verizon FiOS … who actually subscribes to this service? Where does it even exist, and where it does exist does it have any customers that consume Spanish-language media? We snooped around. Millions are impacted by the loss of Univision’s channels … or are they?
According to a source close to the matter, some 5 million people are FiOs subscribers. But, the source adds, “Verizon doesn’t index high with Hispanic as do other large mobile providers.”
So, are we talking 500,000 impacted subscribers, assuming 10% of all FiOS subscribers are Hispanics who consume Spanish-language media?
That may sound like peanuts, but it’s still significant.
Verizon Fios is largely concentrated in the Northeast Corridor of the U.S., serving the New York Tri-State Area, Boston, Philadelphia, and much of the residential communities surrounding the Baltimore and Washington, D.C. areas. It also has a strong presence in Pittsburgh.
Where it no longer has a presence is in the key Hispanic market of Los Angeles, where Frontier FiOs took over the Verizon build-out of its fiber optic TV delivery platform.
But, look at the imprint Verizon Fios has between our Washington, D.C.-area office in Woodbridge, Va., and the Boston area — a huge migration center for Puerto Ricans.
Then, look at the New York Tri-State Area. In Kingston, N.Y., our editor-in-chief’s hometown, Verizon Fios is actively competing against Spectrum, DISH Network and DirecTV for consumers — and Latinos are a big part of that push.
Yet, look at the final sentence of Univision’s response to a letter from Verizon SVP/Public Policy & Government Affairs Kathleen Grillo to FCC Chairman Pai. Univision says: We stand ready to review any fair proposal from Verizon that doesn’t devalue Spanish-language programming and dismiss the needs of its audience.
The key word here is devalue — and look at how Univision is “valued” by Verizon. In Grillo’s letter to Pai, she says, “We informed our customers that Univision’s most popular programming is available through its mobile app, Univision NOW, for $5.99 a month. (As a point of reference, this is a much better deal than what they are offering Verizon for customers who watch their channels through Fios TV.)”
Wow … that statement alone tells any Latino that they’re an after-thought. That’s stupid, and a boldly bonehead statement from Verizon. The best ROI and growth opportunities for its service are with Hispanic consumers in 90% of its coverage area. It should be doubling-down on Hispanic media.
“For our subscribers who have watched Univision’s programming for more than two hours a month, we are offering a one-time credit of $5.99 to cover the cost of downloading and using the app,” Grillo says.
Well, considering the time spent watching Univision compared to other networks, that’s about everyone … right?
“In addition, we augmented our Spanish-language lineup by making two channels, WAPA America and TV Dominicana, available to all of our customers at no extra charge.”
Congrats Hemisphere Media Group.
“This is in addition to our robust line-up of Spanish-language programming that includes channels like Telemundo, Telemicro Internactional and TVE interanctional.”
If only Grillo could spell Internaciónal correctly, let alone provide the names of channels Hispanic consumers really feel compelled to watch. What the hell is Telemicro? TVE appeals to people from Spain.
This battle may not be won in a pretty manner, but it should involve a fair price to Univision from Verizon, and greatly increased efforts to attract Hispanic consumers. Otherwise, it is Verizon that loses and may as well give up as OTT platforms, DBS players and MVPDs such as Spectrum, Optimum and Comcast rebrand FiOS as “Formerly Innovative Obsolete Services.”
