Altice USA's dropping of Starz Jan. 1 is the latest clash in a fight between MVPDs and programmers over traditional carriage models in a time of multiplying direct-to-consumer (DTC) offerings, industry experts said. But that cable model evolution is happening slowly, and the fight is simmering more than boiling, with other cable network blackouts not immediately expected, we were told.
Despite 2017 being a particularly active year for retransmission consent negotiations, cable and broadcast experts weren’t expecting a notable wave of new blackouts on Jan. 1 triggered by contracts that expired Dec. 31. The end of 2016 had a slew of retrans disruptions, and there were worries about sizably more at the end of 2017 (see 1701030046). Alaska's GCI emailed customers last week that they might lose local ABC and CW stations from their cable lineups on Jan. 1 and the local Fox station on Jan. 15 due to a retrans impasse with the stations' ownership.
AT&T's bid for Time Warner and Disney's quest for Fox likely will lead to even more video industry mergers and acquisitions in 2018, particularly as mid-sized programmers and distributors look to scale up or get assets that will let them compete in an increasingly direct-to-consumer (DTC) marketplace, experts said. "If you're a Viacom or a Discovery or an AMC, you have to look at [the consolidation trends] and say, 'Wow, we're becoming more fringe than core,'" said Andre James, head of Bain & Co.'s Americas media and entertainment practice.
Comcast/NBCUniversal likely doesn't have much to fear about the looming expiration of conditions on that 2010 deal, with it being unlikely either the DOJ or FCC will seek behavioral or structural conditions beyond that time, experts told us. But there's disagreement whether Justice's bid to block AT&T's buy of Time Warner (TW) (see 1711210005) indicates the agency should be doing something on Comcast/NBCU. The FCC conditions expire Jan. 20, and DOJ conditions expire in September. Public Knowledge (PK) on Friday became the latest party to call for Justice action on the expiring conditions.
Comcast's NBCUniversal and three regional sports networks over-the-top offerings undermined Wave's ability to meet existing programming agreement terms, the smaller company said in an FCC unfair competition complaint to have been posted Tuesday. The petition for declaratory ruling said Comcast would settle for only "a Draconian remedy" that made competition against Comcast's MVPD services on the West Coast impossible. It said Comcast -- by increasingly making RSN content available via OTT -- resulted in cord cutting that made it difficult for the cable ISP to continue to meet contractually set penetration levels. It said NBCU and the RSNs in response demanded the RSNs be moved to Wave's Lifeline tier but that would have led to "an avalanche" of other services with tagalong rights also relocating to Lifeline, making it uncompetitive. It said NBCU in July demanded and received $2.7 million, mostly in damages, for the RSNs not being repositioned to Lifeline from the Expanded Basic Tier. It said ongoing talks with NBCU made it clear NBCU didn't actually want the RSN services repositioned but wanted the ongoing breach allegation "to sustain its Machiavellian plot" to block Wave from accessing the commercial arbitration remedy that was part of the Comcast/NBCU consent decree.
Experts see scenarios where major studios may or may not oppose Disney's planned buy of Fox (see 1712140038). Studios won't be happy about the increased competitive power and market share that comes with Disney/Fox, but many might also be looking to do their own mergers and acquisitions in response and don't want to raise too big an objection, said Avri Ravid, Yeshiva University professor of finance and an expert on M&A and the entertainment industry. The deal likely won't need to go through FCC review since no Fox-held FCC licenses central to operations are being transferred, a communications lawyer said.
With lawsuits coming and protests occurring outside the FCC meeting where net neutrality rules were changed, advocates for keeping the status quo said they will press on. And those for and against the regulatory rollback reacted in droves, with dozens of statements issued shortly after the 3-2 party-line vote. Free Press Senior Counsel Jessica Gonzalez said her group will sue the FCC. President Craig Aaron told us he anticipated lawsuits by a variety of other groups. And the FCC's chief technology officer had raised concerns, which he said have been addressed.
Whether DOJ would approve a Disney buy of nonbroadcast Fox assets is unsettled among mergers and acquisitions and other experts we talked to. A key question before regulators will be how to define what New Disney is -- a major player in sports content and movie production, or a much smaller content producer in the growing streaming landscape, they said. Disney and Fox reportedly plan to announce a deal as soon as this week. They didn't comment.
Boeing no longer intends to launch and operate the V-band non-geostationary orbit (NGSO) satellite constellation it submitted an application for in 2016 (see 1606230050), handing off its plans to an company owned entirely by OneWeb founder and Executive Chairman Greg Wyler. In an FCC International Bureau filing Wednesday, the company asked for permission to amend its V-band constellation application to substitute in Wyler's SOM1101 as the one authorized to launch and operate the broadband constellation. Boeing denied its initial application was a case of spectrum speculation, saying it submitted it "in good faith with intent to construct a satellite system," but it and SOM1101 concluded "it would be more appropriate" for SOM1101 to be the licensee with Boeing "remain[ing] available to provide manufacturing and advisory service as needed." Boeing said SOM1101 "is well-positioned to bring innovative services to market." It said it won't profit from a SOM1101 license transfer when it's partially reimbursed for part of its NGSO application costs. It has been common for satellite manufacturers to file "on spec" for different systems as a means of spurring interest in new technologies, so it wouldn't be fair to suggest Boeing never had any intention of operating its own system, said Andrew D’Uva, president of satellite and wireless consultancy Providence Access. If Ku-band systems are "oceanfront properties," D'Uva said in an interview, V-band "is tomorrow’s river or bay-front real estate" -- requiring development but inevitably built on. He said Wyler's record in NGSO constellation concepts like O3b, being brought to operational fruition by subsequent investors, means any project in which he's involved "is likely to attract wide attention and interest." Boeing, OneWeb and O3b didn't comment.
The World Telecommunication Development Conference in October in Bueno Aires "really laid in sharp relief" some challenges the U.S. faces in the ITU, with sizable pushes by several nations for a much bigger ITU role in managing the Internet, Steve Lang, acting director-multilateral affairs, State Department communication and information policy office, told International Telecommunication Advisory Committee (ITAC) members Thursday. Lang said the U.S. had some successes at WTDC-17 in areas such as broadband deployment, emergency deployment and connecting rural communities. There was a clear division about the ITU, with the U.S. and allies on one side and Russia, China and some developing nations on the other, he said.