Any agreement reached between Viacom and DirecTV following a blackout of 26 channels that started last week will likely be closer to the programmer’s ask than the distributor’s bid, said Bernstein Research analyst Craig Moffett. Generally, “programmers hold the cards,” he said in a research note. “Substitutes for programming, on the other hand, are imperfect at best.” However, available viewing substitutes, the addition of the Disney Junior channel to DirecTV’s lineup and other factors, “combined with ratings weakness at most of the Viacom networks, have seemingly strengthened DirecTV’s resolve,” he said. “Viacom’s online withdrawal has alienated many of their own would-be online viewers.” Worse, Viacom “self-evidently bolstered DirecTV’s argument that the very availability of that programming undermines Viacom’s traditional pay-TV value proposition (or else why would they have had to pull it?),” he said. If the pay-TV programmer grants a meaningful bundle of digital rights to DirecTV “then Viacom will likely be able to achieve a high enough revenue growth rate to save face,” he said. DirecTV subscribers lost channels like Nickelodeon, MTV and Comedy Central after the companies couldn’t reach a new deal (CD July 12 p10) . Viacom also blocked access to streaming content from these networks (CD July 13 p12). In a blog post Monday, DirecTV said it’s getting closer to a long-term agreement with Viacom to resume carrying the dropped channels. “Rest assured, this situation is temporary and the channels will return,” the post said. The DBS company directed customers to Hulu.com to view episodes of the lost programming. Viacom’s action is a “temporary and regrettable tactic” to force customers to pay substantially more for its networks, DirecTV CEO Mike White said in a video address to customers on www.directvpromise.com. Viacom didn’t respond to a request for comment.
Deciding whether to accept FCC broadband funding under Phase 1 of the Connect America Fund will depend on many factors, not just on the amount of per-household support available, Verizon told an aide to Commissioner Ajit Pai on Thursday (http://xrl.us/bng3br). The company was awarded $20 million to deploy broadband to unserved areas at a subsidy of $775 per location, and has until July 24 to state whether it will take the money (CD July 10 p5). Regarding frozen universal support for broadband operational expenses, carriers should be afforded maximum flexibility in using the funds if the permanent Connect America Fund is delayed, Verizon said. It offered suggestions for near-term changes to the USF contribution system, including annual modifications to the Form 499 instructions for notice and comments, resolution of issues regarding potential contributions on multi-protocol label switching-enabled service, and cleaning up the reseller exemption process. Verizon also opposed subjecting text messaging revenues to USF assessments for the first time.
Dish Network declined comment on a report that it may settle Cablevision’s $2.5 billion breach of contract suit against the company as a September trial nears. A settlement “at or before” the start of the trial on Sept. 18 in New York Supreme Court is “relatively likely,” Barclays analyst James Ratcliffe said. Cablevision sued Echostar in 2008, claiming it breached a 15-year distribution agreement signed three years earlier to carry its Voom channels. Dish assumed related litigation when EchoStar was spun off as a separate hardware-related company. Voom had been part AMC Networks, which was spun off from Cablevision. “Dish has historically been willing to fight litigation to the bitter end,” Ratcliffe said. “In this case, however, we believe the company is more likely to be willing to settle, given the large absolute size of the potential downside” in the event that Cablevision and AMC prevail at trial. New York state rules require Dish, if it appeals a negative trial judgment, to post a bond for the entire value of the judgment, “increasing costs of an extended fight,” Ratcliffe said. The case could be settled as part of wide programming agreement involving Dish and AMC. A New York state appeals court earlier this year rejected Dish’s challenge to sanctions a lower court imposed on the satellite operator for allegedly destroying evidence in the suit. The New York State Supreme Court’s Appellate Division upheld Judge Richard Lowe’s ruling that he could tell jurors about erased emails. Jurors could assume the email evidence would benefit Cablevision, Lowe said. Cablevision and AMC start the trial with a “huge head start” given that the jury is to assume that Dish destroyed records that supported Cablevision’s case, Sanford Bernstein analyst Craig Moffet said in a research note. Dish terminated its agreement with Voom and Cablevision in 2008, claiming the cable operator didn’t invest $100 million annually on the HD service as agreed on. Lowe ruled that Dish should have started preserving records related to Voom in 2007, around the time it began weighing dropping the channel. Cablevision scrapped Voom in 2008.
While it’s admirable that the FCC freely granted waivers for disasters and emergencies, “these do not exhaust the other worthy public causes that could potentially be advanced through the broadcast medium of non-commercial stations,” the National Religious Broadcasters association said in comments in docket 12-106 (http://xrl.us/bng3b3). Comments on proposed changes to the process of obtaining a waiver for non-commercial educational stations to conduct on-air fundraising for third parties are due July 23. Where a non-commercial station raises funds for a for-profit organization, “this may indicate that the fundraising effort lacks a broad public interest,” NRB said. The problem disappears where the activities seek to benefit a worthy non-profit cause, it said. “Non-commercial licensees should rely on their own fund-raising appeals to cover the expenses of their own operations.” NRB proposed that all non-commercial broadcasters be exempted from restrictions on conducting fundraising activities for other organizations which are non-profit under Section 501(c) of the U.S. Internal Revenue Code provided that “such activities do not alter or suspend more than one percent of the broadcaster’s total program airtime annually.” The fundraising activities exempted shall be directed to an identified, bona fide charitable, educational or religious need which the nonprofit’s equipped and committed to aid, the association said. The station “during such exempt fundraising activities” should “fairly inform its audience of the nature and extent of the need, its possible causes, and the benefits likely to result from public financial support,” NRB said. “Nothing in this provision shall affect the ability of the commission to grant waivers to non-commercial broadcasters."
There are inherent uncertainties and inequities in applying annually variable benchmarks to capital investment projects that can last more than 20 years, the Western Telecommunications Alliance told advisers to FCC commissioners Ajit Pai and Jessica Rosenworcel Thursday, according to ex parte filings (http://xrl.us/bng28f). WTA met with the advisers to discuss the “unpredictability and other defects” of the Wireline Bureau’s quantile regression analysis benchmarks and the adverse impacts they have upon infrastructure investment projects and plans of WTA’s rural telco members. WTA also discussed with Rosenworcel’s aide concerns regarding recent changes to the intercarrier compensation rules. As the commission moves toward a “bill-and-keep” system, it “destroys the incentive for other carriers and service providers to negotiate alternative interconnection arrangements that would require them to pay something (such as port and link charges) for their use of ‘last mile’ networks,” WTA said.
The Michigan Public Service Commission rescinded the license of Drenthe Telephone and ordered its phone numbers surrendered to the North American Numbering Plan Administrator in light of the telco’s purchase by Allendale Telephone on May 25, 2011. After the consolidation, Allendale “was granted a permanent license to provide basic local exchange service in the Drenthe exchanges in the October 4, 2011 order in Case No. U-16835” and Drenthe customers learned that Allendale would be taking over, the commission said in a Friday order rescinding the license (http://xrl.us/bng2s8). Drenthe told the commission it would surrender its license, in a June 21 message saying it now lacks customers and “has ceased operations in Michigan."
Seven joint applications received approval for interconnection agreements or amendments to existing pacts from the Michigan Public Service Commission at a Friday PSC meeting, said a commission order (http://xrl.us/bng2qm). “The agreements and amendments are consistent with federal and state law and are in the public interest.” The companies include Kaleva Telephone, New Cingular Wireless and Winn Telephone. All applications were first filed June 29.
211 now may be assigned as “a community resource information and referral answering point for various geographic areas within the state” for more communities, the Michigan Public Service Commission ordered Friday (http://xrl.us/bng2u2). The ruling covers Alanson, Boyne City, Boyne Falls, Brutus, Charlevoix, East Jordan, Harbor Springs, Levering, Mackinaw City, Pellston, Petoskey, Beaver Island and Walloon Lake -- areas handled by Community Access Line. The company first applied for the 211 answering point in a March 30 application. The number already serves as a community information source for Muskegon, Ottawa, Mason, Oceana, Manistee, Lake, Mecosta, Newaygo and Osceola counties throughout the state. “Service platform issues should initially be determined between CALL 2-1-1 and the carriers,” the PSC order said, and cost of service should remain “a competitive issue rather than a matter subject to regulatory resolution.” The commission said its role will be limited to instances of interconnection issues between carriers unless the relevant parties seek the commission’s voice. Similar 211 systems currently operate in 39 states, Washington, D.C., and Puerto Rico, the FCC website said (http://xrl.us/bng2uo). It said the FCC first reserved 211 in 2000 and “intended the 211 code as an easy-to-remember and universally recognizable number that would enable a critical connection between individuals and families in need and the appropriate community-based organizations and government agencies."
BT Communications Sales wants the South Carolina Public Service Commission to know it “does not provide residential local exchange services and as such is not subject to the requirements of” Sections 103-607 of state regulations, the company wrote the PSC Friday (http://xrl.us/bng2ob). That regulation, it said, took effect June 24 and required “all telephone utilities that provide retail residential local exchange service that have not invested at least five million dollars in telecommunications facilities in South Carolina will be required to file a bond or other security mechanism with the Public Service Commission of South Carolina” (http://xrl.us/bng2n7).
Sprint Nextel expanded its 4G LTE network to 15 cities in Georgia, Texas, Missouri and Kansas through its Network Vision, the carrier said Monday (http://xrl.us/bng2i7). Sprint said it plans to continue expanding its 4G LTE markets throughout this year and hopes to complete the buildout of the nationwide network by the end of 2013.