Saturday, Jan. 10, couldn’t come soon enough for tens of thousands of DIRECTV customers in the Acadiana market who, since New Year’s Day, were unable to watch The Ellen DeGeneres Show, Wheel of Fortune, Black-ish and Jimmy Kimmel Live, not to mention KATC TV3’s market-leading local news and sports coverage.
Also blacked out from DIRECTV was KATC’s CW sister station.
But that Saturday, Cordillera Broadcasting, the Minnesota-based parent company of the local ABC affiliate (which is itself a subsidiary of South Carolina-based Evening Post Industries), and DIRECTV ironed out an undisclosed agreement on the retransmission fee DIRECTV pays to Cordillera to carry its programming, and KATC returned to DIRECTV.
Cordillera wanted a larger fee — six times larger, according to DIRECTV, which characterized the company’s demands as a “shakedown.” The stalemate affected some half a million DIRECTV customers in seven states where Cordillera owns 10 TV stations.
Almost as soon as the stalemate began and TV3 disappeared from DIRECTV, the station began appealing to viewers, urging them to contact DIRECTV and demand the station be returned to the satellite service.
“The fee would equate to less than a dime a day for both KATC and KATC-CW,” KATC General Manager Andrew Shenkan told ABiz a few days after his station went black on DIRECTV, echoing a statement the station put out on its website. “The vast majority of the programming fees we receive from cable and satellite providers go directly back into programming costs levied by our network and studio partners that produce and distribute the content viewers value most. The fees also provide resources to continue to deliver the local news, weather and sports coverage viewers count on.”
KATC insisted that its request for an increase in the retransmission fee paid to it by DIRECTV was in keeping with standard industry rates. (The channel never disclosed what DIRECTV paid in retransmission fee through the end of 2014 nor how much of an increase Cordillera was seeking.)
Shenkan pointed to satisfactory agreements with Cox, LUS Fiber, Dish Network and other providers in disputing DIRECTV’s claim that the fee increase was unreasonable: “DIRECTV may claim that the station is seeking an unreasonable fee increase as a means to garner support in this dispute; however, the fact still remains that we have retransmission consent agreements with every other local and national provider, so DIRECTV is the only company that has been unable to reach an agreement with us.”
But DIRECTV was having none of it.
Soon after our online article about the standoff appeared, a DIRECTV spokesman, Thomas Tyrer, disputed Shenkan’s KATC claims, insisting that DIRECTV needs permission from TV stations to carry their programming and that Cordillera was withholding that permission unless DIRECTV ponied up with the higher retransmission fee — 600 percent higher, according to Tyrer.
Inn an official DIRECTV statement offered by Tyrer, the satellite company suggested (without explicitly saying) that Cordillera’s demands could lead to higher subscription costs for DIRECTV customers, and that Congress might intervene: “We believe loyalty should always be rewarded and never abused, and appreciate our customers’ patience since it has a direct impact on what they ultimately spend,” the statement read in part. “Louisiana’s Congressional representatives are also paying attention and the House and Senate recently passed legislation to help rein in some of these chronic abuses and end these station shakedowns like KATC’s once and for all. We join members of Congress and the rest of our Lafayette customers in demanding KATC return to their homes now.”
Disputes between television stations and signal providers like DIRECTV are not uncommon. Late last year Fox News and Dish Network were at odds over a retransmission fee, and in 2012 a handful of stations in Miami and Boston temporarily vanished from DIRECTV in a retransmission-fee dispute with the stations’ parent company.
The recent KATC incident also wasn’t Cordillera’s first brush with demanding increased retransmission fees and yanking its programming from a television provider as leverage: Cordillera stations in the Corpus Christi, Texas, market were off the Time Warner cable system for five months in 2011 and 2012 due to a similar dispute.
Althoughn neither DIRECTV nor Cordillera have revealed the terms of the agreement, from an economic and bargaining standpoint, there’s little question that DIRECTV was in the catbird’s seat. The reason: ratings, and the ad revenue tied to them.
Then Nielsen Company tracks the number of television viewers and their demographics during four “sweeps” months annually — February, May, July and November, with February and November being the most important for a variety of reasons. Doing well during sweeps lets TV stations command a higher price for advertising.
This is why everyone from local broadcasters like TV3 to the national big boys roll out their most sizzling, gazegrabbing programming during sweeps months. You know November or February are close when KLFY and KATC start promoting their hard-hitting investigative reports or tear-jerker human-interest stories — they want eyeballs and the Nielsen ratings that go with them.
When the standoff between Cordillera and DIRECTV began on Jan. 1, February sweeps was less than a month away. (It actually begins on Jan. 29.) Had KATC and the other Cordillera stations not been on DIRECTV, Cordillera risked a ratings slump and a potential hit to ad revenue. In the case of KATC, the risk was compelling: The local ABC affiliate fought hard over the last decade to close a ratings chasm with longtime market leader KLFY, investing in on-air talent — notably meteorologist Rob Perillo and now-retired anchor Hoyt Harris — news formats (remember “News that gets to the point!”?) and, most recently, a new multi-million dollar studio set. The result is that KATC is far and away the market leader now for local news programming. That translates into enhanced ad revenue.
Inn the case of KATC, it’s impossible to know exactly how many TV households it risked losing during sweeps had Cordillera not cut a deal. Tyrer, the DI- RECTV spokesman, cited “competitive reasons” in declining to provide subscription numbers for the Acadiana market.
However, according to an industry source, it’s fair to say that roughly 20 percent of all TV households in the market get their signal through DIRECTV.
The Lafayetten DMA (Nielsen shorthand for Designated Market Area, which in KATC’s case includes Lafayette and surrounding parishes) is the 122nd largest Nielsen market in the country, nestled between Eugene, Ore., and Santa Barbara, Calif. Nielsen counts just more than 234,000 TV households in the Lafayette DMA. Twenty percent of that comes to just under 50,000 households on DIRECTV.
Was Cordillera willing to risk losing 50,000 TV sets to KLFY and KPLC during February sweeps? If you’re a DIRECTV subscriber, the answer to that question can be found on Channel 3 of your TV set.