September 01, 2009
DirecTV's contract with the Versus network was up on Aug. 31, and warned that "Versus may be removed" from the satellite provider's lineup if the contentious negotiations between the two didn't arrive at an amicable end. As you can see, they didn't:
Both DirecTV and Comcast, which owns Versus, are engaging in separate public relations campaigns as subscribers suddenly face a world without buck-hunting, cage-fighting and occasional NHL hockey conveniently available on the same network. DirecTV claims the dispute is over Comcast "demanding renewal terms that did not reflect market value for the channel but also demanding carriage terms that were discriminatory." From Multichannel News:
DirecTV, in a statement early this morning, said that Comcast, which owns Versus, "has forced us to take down the channel because we will not agree to their ridiculous demands that simply do not reflect current market valuations for their programming." The contract expired at midnight on Sept. 1. Versus did not respond to an email looking for a comment early this morning.
According to SNL Kagan, Versus is getting about 18 cents per subscriber per month in monthly carriage fees from distributors in 2009. DirecTV said it already pays Versus more than any other independent distributor and that the 20% hike it is seeking "for what is basically a paid programming and infomercial channel with occasional sporting events of interest is simply piggish."
Ouch! Guess you can talk a big game when you have enough NFL Sunday Ticket revenues to fill a Scrooge McDuck money bin. Also interesting from Multichannel:
The dispute also pertains to positioning as DirecTV has offered Versus on its Choice Xtra level of service and above. DirecTV said that Comcast allows other distributors to carry Versus at much lower level of distribution, including Dish Network, which positions it on its AT250 package.
DirecTV has the more difficult PR task, which is explaining to its subscribers why a channel some of them find essential to their viewing experience is no longer available, and with the justification coming down to a money squabble between elephantine corporations. Not exactly an easy sell.
Which is why Versus is, in its PR campaign, preying on viewer discontent to win the day.
From Versus, here's screenshot of their call-to-arms Web site:
Once inside the site, viewers are sent to an email prompt that sends a message directly to DirecTV. So it's like one of those political mailing campaigns that are either tossed aside because of their organized nature or taken seriously when the numbers balloon to extraordinary proportions of dissatisfied customers.
Which begs the question: Do enough viewers care about Versus to make a difference in these negotiations?
Potentially. As Mike Heika writes this morning, Big 12 football fans should be feeling jittery as a Texas Longhorns game could be basically blacked out. Michael David Smith writes on FanHouse that World Extreme Cagefighting observers have wondered if the organization's decision to shift a scheduled Sept. 2 WEC 43 show to October 10 was influenced by the DirecTV dispute. Then there are fans of cycling, Indy Car, bull-riding and, yes, even hockey.
The NHL has been patiently waiting out this scenario, knowing that it has a month to see it play out before its natives get restless. Expect more of the same publicly.
Behind the scenes, this situation is an uncomfortable one for both Versus and the NHL. Neither one wants to see the season begin with 24.2 million subscribers unable to watch marquee games, which are blacked out on the NHL Center Ice pay-per-view package (so much for DirecTV's suggestion for alternatives for hockey fans). That said, one can't imagine a scenario in which the NHL wouldn't support its cable partner and Comcast, which owns a little team called the Philadelphia Flyers as well.
In Versus's case, DirecTV's decision is a staggering blow to their advertising sales pitches: Its claim of being available in 75 million homes would be undermined. And if you don't think ad revenue is crucial to Versus, then you don't understand why those fishing and buck-huntin' shows are still on the former Outdoor Life Network.
From Allan Muir in Sports Illustrated, a source believes Versus has more to lose:
The source said she expected VERSUS to blink first. The real impetus may be college football, which starts up on Sept. 12.
"They spend a lot of time crowing about the fact that they've expanded their exposure to 75 million homes," she said. "Losing a third of that is a non-starter. DirecTV can get along just fine without VERSUS. VERSUS can't live without DirecTV"
But can DirecTV subscribers live without Versus? A scan of the admittedly activist viewers on Twitter this morning shows a good amount of discontent directed at DirecTV rather than Comcast. At least one subscriber on Twitter mentioned receiving a kickback from DirecTV in the form of free services when he complained about Versus getting dropped (we've not confirmed this; take this as anecdotal information).
We feel this dispute will be settled before the NHL season begins, but that doesn't mean the NHL is unscathed here.
I argued with Puck The Media's Steve Lepore last night that this isn't a PR hit for the League because it's a rights quarrel between a network and a service provider, and between two large media companies that really aren't fond of each other. He argued that the NHL gets muddied here simply because of its association with Versus, just like whenever something embarrassing occurs with the network. (How's your V doing, by the way?)
It may not be fair, but he's got a point: Versus was practically built on the foundation the NHL provided, and if this situation isn't resolved it's just more blood in the water for the "get back on ESPN" crowd.