Too Much TV: Your TV Talking Points For Friday, September 1st, 2023

It's the end of the (cable TV) world as we know it. Maybe

Here's everything you need to know about the world of television for Friday, September 1st, 2023. 

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SOME PROGRAMMING NOTES
I'm back after a nearly week-long vacation, which I desperately needed. The trip to Chicago had its highs and lows. We took our teenage son Sam to his first Cubs game at Wrigley Field.  On the downside, early in the trip he tripped on a hole in the sidewalk, fell forward and broke bones in both wrists. So right now he's sporting a cast on the left arm, and a brace and sling on the right arm. As you might imagine, he is not in the best of moods right now. 

Thanks to the kind notes from readers wishing me well during my time off. I am definitely coming back mentally refreshed, which I suspect will come in handy given the current state of the entertainment business. 

CHARTER DELIVERS A WARNING TO DISNEY 
Carriage renewal showdowns are as old as the cable bundle. Multichannel video programming distributors (MVPD) are any service that provides bundled TV channels for purchase to consumers through cable, fiber, or satellite. The newer virtual services like Sling TV and Hulu TV Live are referred to in the industry as vMVPDs. All of these services need a contract from the media company that owns the cable channel in order to carry it. That contract not only dictates the monthly per-subscriber fee that the channel will cost the MVPD or vMVPD to carry it. But there can also be all sorts of other conditions imposed by either side.

One reason John Malone became a billionaire is that he realized early on that bundling a bunch of cable networks and offering them as a take-it-or-leave-it package to MVPDs was a great way to get rich. He became president of a struggling cable system called TCI, which at the time was the fourth biggest cable system in the U.S. He used the leverage of TCI's size to force cable networks into giving his company a small ownership slice to settle carriage negotiations. He also acquired smaller, niche networks and bundled them together with more popular networks in an "all or nothing" package to other MVPDs.

He also helped ensure that the "most favored nation" wording was included in every carriage contract. In other words, no MVPD could obtain a discounted deal for the cable channels. And if Malone could bully one MVPD into agreeing to a huge price increase, their competitors would have to agree to the new, higher price when their contracts came up for renewal.

These practices became the standard approach in the industry during carriage negotiations and that scenario has continued over the past few decades. The approach has only accelerated in recent years as big media companies control more and more of the cable landscape. They use their size to force MVPDs into carrying all sorts of zombie networks that are basically nothing but themed collections of reruns. Sure, MTV Classics, fyi or American Heroes have almost no viewers. But their owners are still able to grab a few cents per subscriber and that's enough to make them profitable.

Carriage negotiations have tended to play out the same way, no matter which companies are involved. If the MVPD doesn't agree to the ever-increasing charge for a bundle that includes a seemingly limitless number of zombie channels, the cable channels get pulled from the MVPD. And while no one cares if they miss this week's airing of a reality TV show from 2012, customers will complain if they suddenly lose access to ESPN or other favorite channels. So typically, the MVPD eventually folds, agrees to the higher subscription fees, and passes along the increases to customers.

But like all aspects of the legacy linear bundle, this approach couldn't last forever amid a declining customer base and competition from everything from YouTube to Netflix. The major media companies can't afford to make changes in the business model. The current "sign this contract or we'll shoot this dog" approach still provides a lucrative (if declining) revenue stream for companies such as NBCUniversal, Paramount Global, and Disney. But it's an idea that is becoming less viable financially for the MVPDs, which are seeing an increasing percentage of their revenue come from providing broadband access. Several smaller MVPDs have basically closed their TV business in recent years rather than agree to yet another round of carriage price increases. And it was clear that at some point, a larger MVPD was going to do the same. Lose access to a host of cable channels and take the heat from customers until they extract more profitable terms.

That tipping point may have come this week, as Charter was unable to come to terms with Disney and that MVPD's 14.7 million customers lost channels including ABC, Disney, FX, and ESPN. The latter channel is a big deal for sports fans, given that the college football season begins tomorrow.

But it's not a great situation for Disney either. Charter provides nearly $200 million per month in carriage fees to Disney and there will also be an unknown number of millions lost in ad revenue given that the blackout will likely lead to a ratings dip for the SEC football games scheduled to air this weekend on ESPN.

In an example of how serious this issue is to Charter, the company held an unusual Friday morning call for investors and the press where the company laid out its position and described the situation as "dire." And that's not an exaggeration, given that the call happened in part because the company legally has to inform investors if it plans to do something that would substantially impact the value of the company.

And while the details of most carriage agreements tend to stay secret except for the overall terms, Charter executives laid out the scope of the deal it had proposed to Disney.

* Given that Disney Bob Iger has said a launch of a direct-to-consumer ESPN streaming service is "going to happen," Charter said it would agree to pay the proposed new sub fee for ESPN, but only on a short-term basis until the ESPN streaming service launched. Charter didn't ask for the ability to shift ESPN channels into a new sports-oriented add-on programming tier, but it's an idea Charter's executives have previously floated in interviews.

* Charter wants Disney to provide the ad-supported versions of Disney+ and Hulu Basic to its customers for free.

* Charter also wants the ability to create cheaper content bundles by pushing many of those so-called "zombie networks" into separate add-on programming tiers.

As you might expect, Disney has apparently told Charter that it is not interested in destroying its current shrinking gravy train and has declined to consider any of Charter's proposals. But Charter executives said in the call that if the issues aren't resolved in the next few weeks, they might reach a "point of no return."

What that looks like isn't clear, but in the call, Charter executives said that only about 25% of their current TV subscribers watch any Disney-owned TV channel and about 12% are "engaged" viewers. Charter reportedly is working to come up with a plan that would help unhappy sports fans subscribe to a different MVPD if they are unhappy with the loss of their favorite Disney networks.

Assuming that Charter holds to their position (and I am already seeing some veteran programmers argue this is a bluff), this could mean the end of the cable bundle as we know it. Charter will make similar demands on other media companies as their carriage agreements come up and other rival MVPDs will see this as their opportunity to extract their own more favorable deals.

If things haven't resolved in the next couple of weeks, I don't think it's hyperbole to say this could change the cable and satellite TV business forever.

TRANSPARENCY AND AVODS
I wrote a couple of weeks ago about content discovery and AVODs. Because the people that program them tend to think of the services as primarily "lean-back" television, there isn't a great deal of concern about providing specific content info to viewers. Some services will provide a heads-up that a show is "leaving soon" from on-demand, but that is generally the most information they'll provide to viewers.

Sharing coming and going info for content on FAST channels is even more unusual. Because the FAST channels can appear on several platforms at once, the platforms don't have a lot of incentive to provide programming information more specific than "X channel is coming and here are a few of the shows you might see." 

All of this is prompted by a discussion I saw today about The Rockford Files and Banacek leaving Amazon's on-demand ad-supported Freevee:

The consensus seems to be that NBC Universal is pulling most of its titles off of SVODs and perhaps on-demand AVODs and will limit those titles to its new FAST channels such as Universal Crime.

But if that's the case, why not say so. Why isn't NBCUniversal out there saying "Hey, we're not just launching these FAST channels. These channels are going to be the exclusive home for your favorite shows such as X?"

As I have mentioned a number of times already, this type of thing is a low-cost, low-effort way to boost engagement. And given that we're talking about ad-supported television, more engagement leads to more ad revenue. Which you would think we would be a goal for media companies.

WHAT'S NEW TODAY AND THIS WEEKEND:

FRIDAY, SEPTEMBER 1ST:
A Day And A Night (Netflix)
Disenchantment Season Premiere (Netflix)
Friday Night Plan (Netflix)
God. Family. Football (Prime Video)
Happy Ending (Netflix)
Love Is Blind: After The Altar (Netflix)
Perpetrator (Shudder)
Power Book IV: Force Season Two Premiere (Starz)
The Lost Flowers Of Alice Hart Season Finale (Prime Video)
The Wheel Of Time Season Two Premiere (Prime Video)

SATURDAY, SEPTEMBER 2ND:
Farm Dreams Season One Finale (NatGeo Wild)
Love in the Great Smoky Mountains (Hallmark)

SUNDAY, SEPTEMBER 3RD:
Dark Winds Season Two Finale (AMC)
Far Haven (Cowboy Way)
Is She The Wolf? Series Premiere (Netflix)
Professor T (PBS)
Unforgotten (PBS)
Van Der Valk (PBS)

MONDAY, SEPTEMBER 4TH:
American Dad! Season Premiere (TBS)
Ancient Empires (History)+
Office Race (Comedy Central)
Secrets Of Penthouse (A&E)
Tough Love With Hilary Farr Season Premiere (HGTV)

Click Here to see the list of all of the upcoming premiere dates for the next few months.

SEE YOU SOON!

If you have any feedback, send it along to Rick@AllYourScreens.com and follow me on Twitter @aysrick.