Independent Programmers Foresee Varying Effects of AT&T/DirecTV on Carriage Opportunities
Some independent programmers see AT&T’s approximately $67 billion takeover plan of DirecTV as an opportunity to expand distribution in other parts of the country, while others see stifling implications for indies from it and other pending consolidation. AT&T’s U-Verse platform features programming from AWE TV, HRTV and other networks. AT&T will continue to utilize independent programmers after its deal is approved, a spokesman said. “Our door is always open to any programmers that have great content that they are willing to license on commercially reasonable terms.” By expanding its broadband footprint, AT&T also plans to provide access to mobile, satellite and broadband customers for delivery of video, creating new opportunities for additional services, he said. Some indies are worried, though.
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There’s a benefit to approaching a large company that doesn’t have its own programming, said Robert Herring, CEO of Herring Broadcasting. Its AWE Network is available on U-Verse and Verizon FiOS. “That leaves a lot of openings for independents to come in,” said Herring. Verizon and AT&T have always been fair to Herring TV, he said. During hearings with those companies, Herring presents its programs, he said. “If they don’t like it or don’t want to carry it, they'll tell us exactly why.” It helps indies when they don’t have to compete against a telco’s own programming, he said. DirecTV hasn’t been very friendly to the indies, Herring said. He said he hopes the deal will make it much better for them: If AT&T keeps the same policy it always had, “it could work out really well.”
The changing market makes it necessary for media companies to adapt, said Chris Swan, senior vice president-distribution and business development at HRTV, a network dedicated to equestrian sports. Some consolidation “could give us the opportunity to expand upon an already good relationship with a company, like Comcast or AT&T, and accrue some benefit as they get bigger,” he said. HRTV is trying to maintain good relations with those companies “in the hopes of gaining more subscribers,” he said.
Any pending “mega-deal” that causes consolidation further serves to limit the opportunities for indies, said Eric Sherman, Veria Living CEO. For example, an approval of Comcast’s plan to pay about $66 billion for Time Warner Cable will put 28 of the top-30 markets in the hands of one company instead of indies having a chance to reach deals with a few different players, he said. Distributing programming has been a “frustrating experience,” Sherman said. “We don’t have the leverage we'd like to gain the traction of the marketplace.” Consolidation also affects the ability of indies to keep programming costs competitive, he said. There are a number of large programming companies putting pressure on distributors, he said. That pressure will be passed on to indies in the form of reduced fees, providing programming for free or limited carriage opportunity, he added: “The whole ecosystem of mega-distributors and mega-programmers works against the interest of independent programmers."
For indies, distribution, not pricing, is the first hurdle, Herring said. “If people can’t see it, you might as well go home.” After getting carriage and getting ratings up a bit, then a programmer can try to get paid, he said. Pricing really isn’t that competitive for indie programming, he said. Indies don’t have much of a chance of getting carriage, he said. If they are paid for carriage, “it’s not going to be anywhere near the money that they [distributors] are paying for their own channels,” he said. That makes it a struggle for the independent programmer, he said. HRTV hasn’t had any issues about pricing for its programming on cable line-ups, Swan said.
With consolidation, the decision making shifts hands, Swan said. Consolidation tends to result in more centralized decision making when it comes to carriage negotiations for indies, he said. “The system influence on programming decisions seems to be less and less as the bigger distributors grow bigger and bigger.” The process now takes place almost exclusively at the corporate level, instead of programmers talking to the field-level staff, he said.
Indies can take advantage of digital platforms to make content available to customers, in addition to trying to have a presence on TV, Swan and Sherman said. “If a cable operator doesn’t make us available, at least there’s a way for us to be able to serve subscribers who would like our content,” Swan said. Veria’s digital strategy has led to an increase in the average time spent on Veria.com by 15 percent per month over the past year, Sherman said.