Article: RejecTV: Satellite customers cope with rate dispute

Mai Hoang
Yakima Herald-Republic
January 30, 2011

YAKIMA, Wash. — For J.R. Holland, Sundays are for football. He spends the day in his recliner, watching National Football League games on Fox in his West Valley home.

“That is my only day of relaxation,” said Holland, a 44-year-old salesman.

But his weekly ritual came to a halt earlier this month when Northwest Broadcasting, the parent company of Yakima affiliate KCYU-TV, stopped airing the channel after months of failed negotiations with DirecTV, Holland’s satellite provider.

His frustration has been compounded by the blackout falling in the middle of the NFL playoffs.

Holland and other television viewers nationwide have been caught in the middle of disputes between paid television providers and broadcasting networks and their affiliates over the value of their signals and programming.

Locally, it’s still unknown whether next weekend’s Super Bowl game between the Pittsburgh Steelers and Green Bay Packers is enough motivation for Northwest Broadcasting and DirecTV to work out their disagreements.

Last fall, a similar debate led News Corp., parent company of Fox, to shut down a station it owned in the New York City metropolitan area, affecting 3 million Cablevision subscribers during the middle of the Major League Baseball playoffs.

DISH Network subscribers in the Yakima Valley missed out on the 2009 NCAA men’s basketball tournament due to a fee dispute between DISH and Fisher Communications. Customers were without KIMA-TV, the local CBS affiliate, for seven months, beginning in December 2008.

Holland actually switched to DirecTV in the wake of that blackout, thinking he wouldn’t have to deal with that situation again.

He was wrong.

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While paid television providers, such as El Segundo, Calif.-based DirecTV, complain that blackouts are increasing, current statistics show they are still relatively rare.

From January 2000 to March 2010, there were 17 programming blackouts, a small percentage amid dozens of deals reached between paid television services and broadcast networks and their affiliates each year, according to a report from SNL Kagan, a Charlottesville, Va.-based firm that provides financial data for the industry, including media and communications.

The main point of contention in the negotiations is retransmission fees, the amount that cable and satellite providers pay to carry a signal from a broadcasting company and its local affiliates.

Experts say disagreements like these come as both parties struggle to maintain their profit margins.

Broadcasting companies and their affiliates are seeing dwindling advertising dollars and are looking to diversify their revenue stream, said Joel Kelsey, political adviser for Free Press, a nationwide nonprofit working on reform in the media industry.

In 2009, local television station advertising revenue nationwide fell by 22 percent from a year ago, according to BIA/Kelsey Group.

Meanwhile, cable and satellite companies are hedging on the price that subscribers are willing to pay each month.

Consumers are dealing with rising cable and satellite bills of anywhere from 3 percent to 5 percent a year over the past several years, said Robin Flynn, senior analyst for SNL Kagan.

With other alternatives to programming such as Internet streaming and DVDs, those providers fear they will lose subscribers if they continue to raise prices.

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