DirecTV, FiOS Might Be the Only Winners in Cablevision-Fox Carriage Dispute


With the World Series inching closer and still no sign of a retransmission-consent deal between Cablevision Systems and News Corp./Fox, observers agree that consumers have been hurt along with the reputations of the two companies and perhaps the FCC, whose power some criticize as toothless.

But Wall Street analysts expect that DirecTV and Verizon's FiOS TV service could be rare winners because they are most likely to pick up Cablevision customers amid the carriage dispute. But rather than buying large numbers of TV or newspaper ads, both have been understated in pitching themselves as alternatives.

A FiOS spokeswoman has said the company has been and expects to continue to be "busy" but didn't say how many customers it might have won over so far. Analysts expect no specifics during Verizon's earnings call Friday.

"We haven't done any mass-market advertising, but we're getting the word out via social media," the spokeswoman said.

A DirecTV spokesman said, "We're not actively marketing against the dispute" but added that it is too early to estimate how many customers the company might gain from the Fox-Cablevision showdown.

Why the marketing restraint? Some observers believe that distributors feel increasingly overpowered by content players and want to project at least a certain level of solidarity, especially since the next dispute might hit closer to home.

"They all fear the programmers," Wunderlich Securities analyst Matthew Harrigan said. "All the [cable operators these days] generally seem to be less nasty in attacking each other during programming disputes."

Analysts also think consumers have gotten somewhat used to temporary program blackouts.

"Most people feel like they've already been inconvenienced enough and don't want to have to bother with switching service providers unless they feel this will be a long, drawn-out ordeal," Evercore Partners analyst Bryan Kraft said.

Also, during the first quarter, when Cablevision had carriage disputes with Scripps Networks and Disney/ABC, the company actually gained some basic cable subscribers.

But Harrigan highlighted that "certainly this appears to be the harshest clash yet involving Cablevision."

Asked for an absolute worst-case scenario guesstimate, Miller Tabak analyst David Joyce said the firm could lose 2%-5% of its more than 3 million customers, or about 150,000 at the very most, in a drawn-out Fox program blackout. But the Cablevision subscriber loss ultimately depends on how much longer the dispute lasts and will likely be much smaller, he said.

Fox and Cablevision continued talks via telephone Wednesday but stayed away from issuing new statements attacking each other. It was believed that they remain far apart on financial terms for a new deal.

Meanwhile, FCC commissioner Michael Copps called on the government agency to take a hard look at its options in the stalemate, arguing that consumers are not protected and that big media companies too often focus on their own profits.

"In too many instances, retransmission consent has degenerated into a fight between huge-monied interests to see who can milk who the most, and consumers are left holding an empty pail," he said. "What we are dealing with here is a fast-changing media landscape with the big players maneuvering to see how they can create new business models that will give them the upper hand over their rivals going forward."

Copps said the FCC "should take a very serious look at whether 'good faith' negotiations are indeed occurring" between Cablevision and Fox.

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