This Time It Is Not Personal

I am sure all of us have noticed the constant reminders during the Fox Sports West broadcast of recent games that DirecTV will soon be booting the network, and others, off its channel lineup. Naturally, this has caused a great deal of consternation among Kings’ fans who would sooner miss a carnal interlude with our wives and girlfriends rather than a Kings game (present company definitely not included). As Scribe pointed out earlier, we have already gone through such an escapade last season with Dish Network, an incident that was painful to me in many ways. I am still apologizing to my downstairs neighbor for damaging his plants when I threw my dish off my balcony after the Kings’ entire October television schedule was wiped out. Watching Dish owner, multi-billionaire Charlie Ergen in his stupid, company logo shirt telling me why I should not be upset did not improve my disposition. Then, rubbing salt on my stitched up forehead cut up while tossing the damn metal plate, Dish Network actually charged me $350 for prematurely disconnecting my service.

Well, I switched to DirecTV, and this time I am not panicking. That is because the nature of the dispute, while superficially similar, is different in nature. As I discussed in my blog on the Dish Network quarrel, this was deeply personal. Put plainly, Rupert Murdoch, the CEO of News Corporation, the owner of Fox, and Charlie Ergen despise each other. The genesis of their hatred goes back to a failed merger between Murdoch’s direct broadcast satellite (DBS) assets and Ergen’s firm which was called Echostar at the time. Making matters worse was that Murdoch was eventually forced to sell these assets (a longitudinal position over the U.S. and some broadcast satellites) to Echostar at a reduced price once it became evident the U.S. market did not have room for a third DBS provider. When it comes to business, Murdoch rarely loses and never forgets an enemy. Given the bad blood, I was not surprised that this fight escalated to the point where customers actually lost some games.

With DirecTV, there are no such vendettas involved. In fact, DirecTV was partially owned by News Corp. as recently as 2008. Murdoch transferred his interest in DirecTV to Liberty Media in exchange for Liberty’s shares of News Corp giving his family tighter control of the latter enterprise. Liberty Media is controlled by John Malone, a cunning executive who ironically became wealthy in the cable television industry. Malone takes second to no one when it comes to furthering his own business interests, but in contrast to Ergen, has made lots of money investing alongside Rupert Murdoch. In an industry that is dominated by gigantic egos, this distinction is critical.

When it comes right down to it, the argument between Fox and DirecTV is about how much multi-channel providers, cable and DBS, should have to pay for sports programming. With the continued fragmentation of the television audience, only one constant remains – the ability of televised sports to draw significant audiences. In fact, NFL games make up 13 of the 14 most watched shows of this fall season. Knowing this, the professional and college sports leagues are able to charge networks such as Fox a premium for the right to broadcast their games. As the cost of these rights escalates, the networks require more revenue in order to pay for them. With advertising growth sluggish due to a slow economy and competition from new media, the only source of cash available to pay for these rights comes from cable and DBS companies who pay a monthly fee for each channel in their lineup. In the case of minor channels, this fee can be as low as fractions of a penny per month. But for the most watched channels such as ESPN and the Fox Sports regional networks, these fees represent a significant percentage of your cable or satellite bill. Any increase in rights fees need to be passed on to us, the consumers, something these companies are loathe to do for fear of antagonizing their customers.

In a nutshell, Fox wants to increase the amount DirecTV pays to carry their network while DirecTV wants to preserve its profit margin. The reality is, however, that neither party can live without the other. DirecTV knows that lots of Kings’ (and USC and UCLA) fans will cancel their service if their games are not available. By the same token, Fox cannot live without DirecTV’s 19 million+ customers as it affects their ad rates and cuts of lucrative rights fees altogether. Put in more simple terms, Malone and Murdoch both want to make lots of money and can only do so if the fans have their faces glued to the screen watching our beloved team. So, rest easy, this will get resolved. Gosh, I love capitalism!



Categories: L.A. Kings News

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20 replies

  1. I hope youre right, cause I hate Time
    Warner.

  2. I also hope you are right because i’m starting to panic.

    I really don’t want to deal with switching providers since i’ve had DirecTV for 7 years now. I came close last year and would have if the Versus dispute wasn’t resolved by playoff time.

  3. Okay, Howard…
    Put up time.

    Outage Under/Over = 7 days, 1 Nov to 7 Nov (Tuesday to Monday)…
    I pick under, settle before the weekend.

    Your pick?

  4. Don’t forget: NFL Sunday Ticket won’t work on Sunday, 5 Nov, for the Fox stations if DirecTV does its worst…

    Also, how much are subscribers willing to pay during a recession for NFL Sunday Ticket? Is $1000/season too much?

  5. The good news is that, if they do cancel these stations, call DirecTV Nov. 1st complaining and demanding FREE Center Ice since you will not be able to view your beloved Kings and I am 99% sure they will abide. I have gotten Center Ice for free the past 2 years by finding something to complain about. This would be the most valid complaint ever.

    The secret is when you call to say “Cancel Service” the first two times the recording comes up. This will bypass all the grunts and get you to a more senior level advisor. They are there to please!

    Hopefully no one has to worry about taking these steps. Or better yet do it now while you have the ammunition, then maybe you get free Center Ice and they never cancel FSW.

    Cheers.

    • It costs over $500 to get a new customer- advertising, fulfillment, etc. it much cheaper to keep an existing customer by giving away things like Center Ice.

    • I’m a DISH Network customer and when they pulled this crap last year, my wife read them the riot act. She complained enough to get $100 knocked off the price of Center Ice (as I live in Texas now and would never get to see my Kings in action).

      That was worth missing the few games.

  6. You better be right about this, Roark.

    Otherwise it’ll be YOUR ass we toss off the second-floor balcony when the Kings spigot is shut down.

    So I hope and trust that your love of capitalism is something more than Ayn Rand-ish tuchuss-licking.

  7. Time Warner Cable went through this too a while back, and they resolved days before the deadline. I will bet that the same happens here.

    • I agree…as a Time Warner customer….and going thru the same BS. It is all a crazy evil ploy to make the general public go nuts…though wait….some people are already there! :)

  8. Another thing…

    Rupert & the Murdochs have been a long-playing Off-Broadway show in business circles recently with the British Tabloid scandal, some calling for the Old Man’s head. He has to prove he is not totally clueless in the running of his businesses, as some have been trying to remove him from the Boards of his companies. Rupert has survived that, and now must make a big splash reminiscent of his old salad days. Also, note the disastrous price-raises made by Bank Of America & NetFlix…

    Rupert does not want a walk-back of his position. He also needs to be decisive, and not come across as an easy mark. Can he do both, and keep investors happy?

    Consumers paying higher prices want to know…

  9. Fios rules!!!

  10. Why are you assholes so easygoing about this?!?

    In minutes our source of supply is disappear. Our connection is gonna be arrested. The IV valve will be turned to the “off”position.

    Have you any idea how much dope I’ll need to medicate myself through THIS fit of anxiety?

    Those of you who don’t have know idea what it means to be a fan.

  11. Who said we were calm?

    I just want to watch Howard throw his DirecTV antenna…
    No stitches, please.

  12. Just to let you know. If you live in So. California and you try to get them to give you NHL Center Ice, you will still not be able to view the Kings games because they get blacked out in your home town area. NHL Center Ice brags about out of market games. We did this last season when Dish Network pulled this crap, so we got NHL Center Ice, and we could not watch ANY Kings games, home or away? I still have Dish, and we kept the NHL Center Ice to watch the rest of the league but screwed when it comes to our Kings.

  13. Are we supposed to rest easy the way we were supposed to rest easy the first time the Doughty deal was getting done?

    Cuz if it’s that kind of resting easy, I need to switch providers pronto … ! ..

  14. I know there are two sides to the DirecTV/FOX negotiations. DirecTV says they are fighting to keep the channels, accusing FOX of demanding a 40% increase, while FOX states that they want the same rates, but DirecTV would rather throw peaceful negotiations out and resort to threatening to take down the FOX channels if a deal isn’t met. All I can say, is I remember how tough it was last year when my employer DISH Network was going through similar negotiations, and the channels were taken down by FOX. It was frustrating to me as a customer because I was unable to watch my favorite shows like Sons of Anarchy and many shows on National Geographic. After a few weeks, an agreement was reached that made sure the channels won’t be affected for a long time. I know how frustrating these negotiations can be for everyone, and I hope that everything goes smoothly for DirecTV customers.

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