Don’t look now, but we may be headed towards another programming squabble. This time, it’s between DISH and Walt Disney’s ABC/ESPN. Their current contract is up on September 30th and rumors have it that they’re nowhere close on a broadcasting fee agreement. Not surprisingly, the 800 pound gorilla is ESPN. Per channel, it’s the single most expensive channel for TV broadcasters to license. In 2013, satellite (and cable) TV providers had to fork over in excess of $5/subscriber per month JUST for ESPN. That’s about $3 more than any other channel. And every year that goes by, ABC hikes their fees at rates way past inflation. Now, I’m certainly no apologist for satellite TV either — most of us don’t love paying close to or in excess of $100/mo for TV, but if you’re a “power” user and value a heavy mix of channels, you deal with it (of course, there are plenty of affordable plans if/when you need to downsize). Bottom line, these transmission fee battles are uber annoying and have become increasingly contentious over the years and it’s almost always the consumer that suffers. Here’s my expected fallout from this latest DISH and ABC issue…
Outcome A) They come to a fee agreement before 9/30
Probability: 25%
Based on recent history (eg, TWC’s recent blackout, other extended fights, etc.), I’m not very optimistic the two parties will find common ground by month’s end.
Outcome B) Nothing happens by 9/30, after heavy posturing a deal is made by Nov.
Probability: 60%
My guess is both sides continue to threaten drastic measures (DISH going non-sports, ABC favoring competitors, etc.) as negotiation tactics drag on. I HIGHLY doubt DISH would ever blackout ESPN; realistically, they’d lose too much market share, and they know it. DISH’s Chairman Charlie Ergen has suggested going non-sports (or at least ESPN) is a viable option, but, again, all just posturing in my opinion.
Outcome C) There’s a channel blackout and it gets ugly
Probability: 15%
If DISH decides to play hardball and look long term (not to mention try to win the PR battle), this might be their best opportunity to do so. There’s currently a “Consumers Have Options in Choosing Entertainment” bill under subcommittee review — a consumer advocate push, it would take a VERY close look at programming fees, and specifically how its evolved in the sports industry. Of course, the end goal is reform and if it were to deem exorbitant fee requests were THE cause for most of the recent channel blackouts, you may see regulation that forces them (way) lower. Of course, DISH (and every other TV provider) would LOVE that; the end result could also be lower subscription fees, so most folks are behind the bill getting passed as well. The sad by-product of that would be a blackout. DISH subscribers would be without ABC, ESPN, ABC family and Disney Channel…probably for at least a few months.
Conclusion
If you’re a current or prospective DISH subscriber, hold tight. A lot of these deals get done at the eleventh hour, even it that deadline gets pushed a few times. I don’t think DISH is intent on putting their market share at major risk, just yet. A major change in the TV fee structure WILL happen, but congress will probably be the catalyst, not DISH.
