Viewers likely to see more pay-TV, programmer fights

ByABC News
July 13, 2012, 5:44 PM

— -- Things are breaking bad between TV programmers and pay-TV providers.

Viacom TV series — such as Tosh.0, The Daily Show and even Dora the Explorer— aren't playing on DirecTV because the TV programmer and satellite TV service remain in a standoff over broadcast fees.

Meanwhile, fans of the AMC TV series Breaking Bad won't be able to watch the debut of the show's fifth season Sunday night on Dish Network if AMC and the satellite TV service don't resolve their own fee skirmish that began July 1.

To placate viewers, AMC is streaming the show live online at 10 p.m. ET Sunday at AMCTV.com. "We want to give Dish customers an extra week to switch providers so they can enjoy the rest of the season," the network said in a statement.

Don't expect the relations to get rosier between programmers and pay-TV providers. Networks are looking for increased programming fees from cable, satellite and other pay-TV services to pay for shows and, of course, to boost their revenue.

Meanwhile, pay-TV providers have to juggle increased programming fees and flattening growth in the number of pay-TV households. DirecTV, for example, spent about $9.8 billion on programming in 2011, up 12.6% over 2010.

Passing programming costs directly to consumers could ignite a wave of subscriber "cord cutting" — dropping pay-TV services — and their turning to Internet video. So far, that hasn't happened in a big way. Pay-TV homes remain stable at 101 million, about 84% of TV homes, according to IHS Screen Digest. But "something has got to give," says Tom Adams, an analyst at the market research firm.

Industry conflicts expand

Current government regulations including the 1992 Cable Act were not meant for the post-Netflix era, argued Dish Network Chairman Charlie Ergen last month before a U.S. House subcommittee. "Broadcasters play the pay-TV providers against one another," he said.

Consumers get caught in the middle and usually wind up paying higher bills, Ergen said. "And, the problem is only getting worse."

The problem is bad enough that even competitors are joining forces. Viacom's demand for increased fees from DirecTV "is a reflection of an unbalanced multichannel video business model," said Cox Communications' Bob Wilson in a statement after DirecTV had to pull Viacom's channels off its system. (A total of 17 networks and 26 channels were removed; some were standard definition duplicates of HD channels for BET, Comedy Central, MTV, Nickelodeon, Spike, and VH1.)

As more problems bubble up in the industry —Time Warner Cable customers in 11 markets are currently without local Hearst network affiliates in another rate dispute — multiple arms of the government are looking to get involved.

Earlier this year, the Federal Communications Commission said that it plans to take up the issue of retransmission of broadcasts by pay-TV operators. Senator Jim DeMint, R-S.C, and Rep. Steve Scalise, R-La., have introduced a bill, known as the Next Generation Television Marketplace Act, to deregulate the marketplace.

And the Justice Department has been contacting pay-TV providers as part of its investigation into whether cable companies are attempting to thwart the success of Netflix and online video sites by capping data limits, The Wall Street Journal recently reported, citing unnamed sources. DOJ declined to comment.

"We are glad that the Justice Department is getting involved and looking at some of the issues that we have identified," says John Bergmayer, senior staff attorney for Public Knowledge, a public interest group that thinks the FCC should update its retransmission policies. "We are at a point where a lot of people are realizing the system is in trouble."