Tuesday, January 14, 2014

Charter Cable Talks, DirecTv Balks

A busy 24 hours in media and distribution as Charter Cable finally pulls the trigger and makes a formal bid for Time Warner Cable; at the same time, negotiations for contract renewal collapses between DirecTv and The Weather Channel and so the network is dropped from its lineup.  And yet neither of these occurrences should come as a surprise to anyone.

For Charter and Time Warner Cable (TWC), discussions have been ongoing and the question became just how much would Charter bid.  The current offer matches the current stock price and does little to impress TWC management.  So next step, Charter plans to take it directly to the shareholders and demonstrate that a combined entity will deliver better earnings, higher profits, and a better investment.  And more leverage to negotiating license fees with cable networks.

Which brings me to the latest cable operator balking out what are likely higher license fees for carriage of The Weather Channel.  Certainly its license fees are not exceptionally high, especially compared to sports and other top 10 cable networks; still, weather content can be found quickly and easily online.  When weather doesn't affect our lives, Weather Channel programming tends toward reality type programming; but, when the big storms hit, weather fans love to watch the network and embrace the rising tides, high winds, snow flakes, and more. 

But then again, it seems, so does every other news oriented network, from CNN to MSNBC to Fox plus all the broadcast affiliates.  Weather reporting is everywhere. In fact, cable networks have all left their core niche arena to be general entertainment for all, from news and weather, to reality programming and broad based entertainment.  So DirecTv must believe that their customers will not suffer greatly as they have other networks to fill the void.  Plus any cost savings helps DirecTv to keep its subscription fees from rising. 

The Weather Channel may be feeling the heat, but so have other networks struggling to get or keep on cable line-ups.  And with more consolidation potentially in cable, a TWC-Charter merger lets them negotiate even more tightly in what channels stay on their merged line-ups and which channels may face the ax.