NBCU Threatens to Pull Channels From Cable ONE

USA Crawl Pricing Dispute Example Still - H 2014
Courtesy of NBC

USA Crawl Pricing Dispute Example Still - H 2014

USA, Bravo and others could be blacked out beginning Jan. 1

NBC Universal surprised Cable ONE Thursday when it took an aggressive public stance to support its demands in ongoing negotiations with the regional cable systems operator. At issue is how much Cable ONE pays to license channels including USA Network, Bravo, Sprout, MSNBC, Telemundo and the NBC network.

NBC Universal, a division of Comcast, has set a deadline of midnight on Dec. 31 to either reach a deal or to blackout its channels beginning on Jan. 1, 2015.

To make its point, NBCU on Thursday also began to run a crawl across a number of its channels: "Attention Cable ONE Customers: You may lose at least 11 of your favorite networks including USA, Syfy, NBCSN, Bravo and CNBC. Take action and call Cable ONE now at 1-844-MY-SHOWS (1-844-697-4697)."

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"We were very surprised," said Trish Niemann,? Cable ONE Public Relations Manager, "as we have been in negotiations for some weeks and are still negotiating. We thought it was going well. We were therefore a little taken aback."

NBCU clearly doesn't agree about how negotiations are going. In a statement it said: "Cable ONE has declined all NBCUniversal offers stating they believe it deserves to receive our valuable programming at below market rates."

A source close to Cable ONE says NBCU is asking for more than double what it charged under the contract about to expire.

NBCU is following a path blazed by CBS and others who for the past year have been seeking what they call "a historic adjustment" in retransmission consent fees.

CBS and now NBCU believe that other cable only services have gotten higher fees in the past, which they say is unfair because their programming is more popular and has higher ratings — so they want a jump in the license fee.

NBCU maintains it is acting reasonably. It points out it has already closed deals with other small cable operators that are part of the NCTC, a cooperative of smaller cable systems. In its statement, NBCU says that deal was negotiated at a time a Cable One executive was on the NCTC programming committee that approved the agreement.

Cable ONE owns 41 cable systems with more than 730,000 subscribers in 19 states. Among the largest cities it serves are Boise, Idaho; Prescott, Ariz.; and cities along the Gulf Coast, including in Miss. and other states.

Cable ONE, based in Phoenix, Ariz., has gotten publicity before when it refused to pay higher prices to content providers. This past March it dropped 15 Viacom channels, including Comedy Central, MTV and Nickelodeon, in a dispute over pricing after negotiations broke down.

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A spokesman for Viacom did not respond to a request for comment for this article.

In a press release, NBCU said that Cable One has lost 9 percent of their subscribers in the past year.

However, Niemann says the situation with NBCU is considerably different from what happened with Viacom because they actually want to make a deal this time. In the case of Viacom, she said they surveyed customers and asked if they would be willing to pay more for the Viacom channels or if they would rather pay the same amount as they currently pay and receive other channels instead, including BBC America, The Blaze, Hallmark Channel, Investigation Discovery and TV One.

In the case of NBCU, said Niemann, customer surveys indicate the NBC networks are of value to them and they want to keep them.

"We have every intention of resolving this," says Niemann, "and not dropping those channels."

Cable One, meanwhile, has its own issues. It announced in November that sometime in 2015 the parent company, the privately held Graham Holdings, will spin off the cable systems into a new publicly traded company.

Graham Holdings is run by the family that used to own the Washington Post before it was sold to Amazon founder Jeff Bezos in October 2013.