On Wednesday, AT&T U-Verse license deals with Rainbow Media will expire. Rainbow, who owns cable networks AMC, WE tv, IFC, Sundance, and others, may be dropped from the channel line-up if renewal agreements are not approved. But that is not the only story in town. ABC/Disney is also negotiating carriage renewal agreements for both its broadcast channel and its cable networks with Time Warner Cable. And rather than sit back and watch, Verizon is taking a proactive competitive stance to woo customers, assuming channels will be dropped. "In a move that underscored the shifting nature of these Big TV brawls, Verizon ads warned consumers that Time Warner’s contract with Disney — supplier of ESPN, ABC and Disney Channel — expires on Sept. 2. Referring to ABC’s dispute with Cablevision in March, when millions of viewers were deprived of part of the Oscars, the ads asked people to pre-emptively switch to Verizon’s FiOS service." How Bold!
Now these two negotiations are being aired in public light just as Comcast and NBC are negotiating their merger with the FCC and DOJ. Are content and distribution meant to live under the same roof? Does enabling such cohabitation hurt other relationships? How can NBC negotiate a fair deal with Time Warner, Verizon, AT&T, and others, when it is owned by a fellow cable company. What is the fair market price? Who gets hurt more, the shareholder or the customer?
These public negotiations allow consumers to see that any license fee increase will raise the subscription price of the cable service. Cable companies will not swallow the increase and reduce its profit margin. So when the negotiations are internal, who knows what the fair market price becomes. How can the other distributors be sure they are negotiating a fair market rate? Are we heading down the path where Verizon will need to buy a broadcast network in order to compete on level ground with Comcast? Does Time Warner buy a third network? And does AT&T buy the fourth. Four mega-content and distribution companies controlling media, what is released and where. Is this the direction the FCC and DOJ want to go? It is the slippery slope that comes into greater focus when content and distribution companies negotiate their license deals by the light of the day.