Why did DirecTV drop Fox?
For instance, DirecTV is one of the biggest satellite television internet service providers in the United States, and in a bid to solve a dispute regarding the fees for carriage of the networks owned by Fox, recently removed the Fox network and its associated stations from its provision list. This has affected millions of customers who rely on DirecTV and are unable to watch Fox programs such as NFL matches, Simpsons, Empire, and many others on their DirecTV service.
It involves the disagreement on the carriage fees or fees for carriage.
It is important to note that the main issue that lies at the root of the conflict is the question of how much money DirecTV has to pay Fox for the distribution of the Fox networks. Essentially, any time two firms sign an agreement to carry content and one of them is a pay TV provider such as DirecTV, there exist carriage fees which refer to the amount of money per subscriber that the TV provider pays the broadcaster and in this case, Fox to air its networks.
It has been noted that Fox wanted to raise carriage fees for DirecTV. But DirecTV was not ready to cave in to Fox arguing that Fox wanted more than a double-digit raise compared to what they paid the former partner. With around 15 million DirecTV subscribers, those increased fees per subscriber presented above would mean tens or hundreds of millions more that DirecTV would have to pay to Fox annually.
DirecTV claimed that Fox has been “unwilling to negotiate fair terms” for carriage fees, while Fox responded that the company simply wanted to deny viewers the services they have paid for, as disputes over carriage fees are typical of many recent TV blackouts as content providers seek higher revenues for subscriber fees and TV providers try to manage an exploding programming cost.
Males are the biggest fans of the NFL, and thus it becomes apparent that the show’s impact on its viewers is a key point of leverage.
As you can see, with the new NFL season starting at the same time that blackout time is set to begin, the lack of live football games has been the primary source of frustration for affected subscribers. Fox broadcasts most of the NFC conference games, therefore, any football fan who has been a follower of his local team has been out of luck if the game aired on Fox station and was not available on DirecTV.
It is important to understand that most likely both sides now are playing football impact as a bargaining chip. Fox understands that NFL games create significant viewership interest in the rest of the fall programming for itself, while for DirecTV NFL games are equally understood as a key link that helps the company avoid rousing serious displeasure and churn among its subscribers to other television service providers. More tension is created every weekend without a deal, meaning more pressure is put on both parties to come to a consensus.
When it comes to how long it may take to complete a given deal, there is often no specific timetable in terms of when the transactions might be made.
For the moment, there appears to be no light at the end of this tunnel, yet. In a further sign of animosity in the negotiations, DirecTV argues that “Fox’s actions are counter to the best interests of consumers.” Fox has suggested that arbitration or binding “baseball-style” arbitration should be used to compel the two parties to agree, but DirecTV has not agreed so far. It is also possible that there are still some deficiencies in the previous rounds in the price and contract terms that have not been settled between the two parties.
Until a broad consensus can be fashioned as to the carriage fee increases and its contract length and so on, this is most likely to be DirecTV customers who would not be getting their fix of Fox networks. Although the long-term problem might be solved by the short-term ‘handshake deal’ which could reopen the channels, more discussions would be needed to agree on a new legally binding contract. Since it took several months for negotiations to reach the current stalemate, it may take several more weeks before the parties agree on the next move – if no other proactive change emerges.
TheTakeaway
In the end, this type of carriage dispute always results in some sort of agreement – but not necessarily promptly that ensures viewers still using the affected service are happy with the resolution. Both sides are positioning themselves for contract negotiations in a high stakes multi-billion dollar chicken game, hoping the other will cave in first while at the same time seeking not to be tagged as responsible for any blackouts of popular networks.
Unluckily, subscribers are the most affected here, as the proverbial ‘guinea pigs’ are trapped in the crossfire. Rather, their increasingly exorbitant pay TV bills help to fund the large carriage fees that underlie the conflict. But when the blackout occurs, the two big players fighting each other do not seem to worry so much as the subscribers who are expecting to watch some programs using the service they are paying for.
Thus, until the deal is reached, the only remaining options for DirecTV customers are to patiently stay tuned for the agreement or find another provider if they wish to secure access to important events such as NFL games on Fox. And we can safely assume that Fox channels will once again come back to DirecTV – even more if viewers continue to leave in search of better service if the negotiations do not yield results..
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