AT&T to Pay TV Viewers: Switch to DirecTV, or Suffer the Consequences

How does a combined pay TV behemoth – the largest on Planet Earth – migrate customers from a service it wants to shut down to another with higher profit margins? Are customers offered a steep discount to make the switch? Rolled over when their existing contract expires? Maybe convinced of the superiority of the new service?

Not if you are AT&T. The old Ma Bell has employed a different, more cynical strategy – by forcing U-verse customers into programming “blackouts” of their favorite local TV stations and then directing irate customers to switch to AT&T’s own DirecTV.

Since its acquisition of DirecTV in 2015, AT&T has begun the process of phasing out its U-verse offerings and pushing subscribers to sign up for the DirecTV satellite TV service. Rather than convince U-verse customers that DirecTV is a superior service – a dubious proposition, to say the least – AT&T is instead manufacturing retransmission consent disputes to deprive viewers of their favorite local broadcast TV stations.

By engaging in hardball retrans negotiations and refusing to pay market rates, AT&T can all but guarantee an impasse with a broadcaster that leaves U-verse subscribers without local programming. Customers who want their local broadcast TV must change pay-TV providers and AT&T can divert them to DirecTV, which pays lower content costs than U-verse and is therefore more profitable.

Of course, once subscribers are locked into a contract with DirecTV, they might be in for an unfortunate surprise.

DirecTV just settled a lawsuit filed by the Federal Trade Commission that accused the company of deceptive advertising practices. It seems DirecTV was luring subscribers with a discounted 12-month promotional rate while failing to disclose it required a two-year contract. Hidden in the fine print? That customers could owe up to $45 more a month in the second year of the contract. Even worse – the contract forced customers who canceled their subscription to fork over up to $480 in early termination fees.

If you do the math, AT&T’s “force customers to switch to DirecTV” strategy becomes apparent. Since the beginning of last year, AT&T has forced five retrans disruptions involving its U-verse service. Yet, prior to buying DirecTV, it had never reached an impasse with a broadcaster.

Raycom Media is the latest broadcast company to become versed in the U-verse tango. In the last two weeks, Raycom granted multiple carriage extensions to AT&T U-Verse in an effort to avoid a disruption in service for Raycom TV station viewers in 22 U.S. cities. Nonetheless, AT&T ignored Raycom’s offers, stonewalled on negotiations, and opted instead to force a programming “blackout” it hopes will result in thousands of subscribers shifting to DirecTV.

AT&T’s pattern of behavior is a far cry from the consumer benefits it promised federal regulators when it proposed its DirecTV merger. Rather, U-verse subscribers are being unfairly punished as a means to an end – the end of U-verse.

Read More

DISH Network: Time to Stop the Retrans Mud Baths

If there were an Oscar this year for Most Disingenuous Comment by a TV Executive, it would surely have gone to DISH Network Executive VP Stanton Dodge. It was Dodge who in the context of DISH’s recent blackout of Hearst television stations claimed that broadcasters “use in-market monopoly power to put profits ahead of the public interests they are supposed to serve.” To Mr. Dodge, we would respectfully suggest: Look in the mirror.

Let’s look at the facts: In 2017, DISH has forced more programming disruptions than any other pay TV service, based on reports from SNL Kagan. In fact, over the last 3 months, DISH has gone only two weeks without a disruption. And since January 2015, DISH has been involved in a whopping 58% of all retransmission consent impasses.

Indeed, no company in America uses its monopoly power to put profits ahead of the public interest more than DISH. No wonder that The Hollywood Reporter declared DISH  “the worst place to work in America” and its CEO the most hated man in Hollywood.

In recent years, DISH:

  • Was found liable for more than 57 million illegal and intrusive telemarketing calls;
  • Reached a $2 million agreement with the Colorado Attorney General over complaints about price hikes;
  • Settled for $6 million when charged with misleading its customers;
  • Had an employee seeking management advice on a job-review website be advised to quit and “go find a job where you can use your talents for good rather than evil”.

DISH, for decades, has been adding to its dossier of impropriety and trying to drag others’ down with them. In refusing to negotiate fairly with Hearst, DISH is employing the same strategy that it has employed with other broadcasters – offer unfavorable terms, force an impasse, blame broadcasters, and ask the FCC to regulate a fair and free video marketplace.

Time and again, DISH CEO Charlie Ergen has made it clear he relishes playing hardball in retrans negotiations, even if that leaves DISH customers in the dark. Ergen once described DISH’s negotiating style in remarks at the Univ. of Colorado as follows:

“You can live in a bubble, and you’re probably not going to get a disease. But you can play in the mud and the dirt, and you’re probably not going to get a disease either, because you get immune to it. You pick your poison, and I think we choose to go play in the mud.”

Rather than wallow in mud, there’s a better way for DISH and other pay TV bad actors to operate. Stop being serial abusers of TV viewers. Engage in serious negotiations. Recognize the value that local broadcasters and marquee broadcast networks bring to the pay TV universe. Focus on customer service and fair business practices. And stop using viewers as pawns in a Washington game to “fix” a fair and free market retransmission system.

Read More

A New Year, But Same Old Pay TV Double Talk

Deadlines on year end carriage contracts between broadcasters and pay TV companies have come and gone, and the usual suspects in DC Telecom World are trying to draw attention to a handful of retransmission consent impasses.  The American Cable Association, joined by the American Television Alliance — a DC front group for the biggest pay TV operators — have yet again jumped at the opportunity to create a narrative that serves their self-interest.

“Retrans isn’t working and we need government to fix it for the sake of consumers” screeches ACA and ATVA. And if you are willing to blindly believe a yarn weaved by pay-TV companies pocketing billions in profits, maybe that’s a storyline you’ll follow.

But it is a new year and we are all making resolutions to be our best. So let’s look beyond the pay TV rhetoric and take a look at the facts:

First, the notion that ATVA and ACA members are “just trying to protect consumers” is absurd. Laugh out loud absurd. “Anthony Wiener Is a Good Role Model” absurd. Need evidence? Then just look at the history of anti-consumer pay TV behavior (annual rate hikes at twice the rate of inflation; abysmal customer service, etc.). It’s a sad and sordid tale, and it’s no wonder the list of ATVA and ACA members are considered among the least liked businesses in America.

Take DISH, for example: accused by the Justice Department of violating the “Do Not Call” list; settling with state AGs to reimburse customers in Wisconsin, Colorado and Washington; and trying to collect a debt from the wrong person. Here’s what judges, regulators, and citizen’s groups have said about DISH.

That DISH and the big pay TV companies continue to bankroll the ATVA effort to “fix” retransmission consent should come as no surprise. After all, DISH was involved in 63 percent of the station level programming disputes in 2015 and 2016. DISH is also the leader in a cynical ATVA/ACA-backed hardball strategy that goes like this: Forget the impact on viewers. Just force enough programming “blackouts” to get Congress and/or the FCC involved.

“Blackouts” That Weren’t

Indeed, ACA and ATVA talk a good “blackout” game in those rare instances of a retransmission consent impasse. What they don’t admit is that a broadcast signal is never truly “blacked out.” Local TV always remains available to viewers via an over-the-air antenna.

Moreover, broadcast TV is also on alternative pay TV platforms in the event of a retrans disruption — something you’ll never hear from ACA or ATVA. The reason? Because their members create a web of roadblocks centered around early termination fees (ETFs) that disincentivize customers from switching to a pay TV competitor. It works like this: When a cable customer is affected by a carriage impasse, she’s often stuck in a long-term two-year contract. ETF fees can be as high as $480, a clever business model designed to trap customers from switching to another pay TV service.

So much for being “pro-consumer”.

Here’s another topic you’ll never hear from ACA and ATVA: refunds to viewers for loss of service after a retrans impasse is resolved. Why? Because they don’t offer them.

No big surprise, perhaps, because ATVA and ACA members also don’t give refunds for frequent “blackouts” of pay TV service caused by sorry service or passing thunderstorms. Funny, but for all the professed “concern for consumers”, our ACA and ATVA friends don’t tell you about downdetector.com. That’s an independent website launched out of frustration over scores of pay TV “blackouts” of local TV stations related to lousy ATVA/ACA member customer service. (And in case you were wondering, the number of “blackouts” because of weather and bad service far outnumber the few retrans impasses that occur every year).

Also conspicuously missing from their rhetoric? The fact that retrans fees are just a fraction of the programming fees paid for basic cable channels, regional sports networks, and premium channels. This despite broadcast stations typically averaging much-higher viewership than these channels. Just one example: 47 of the top 50 shows from the 2015-2016 season were on broadcast TV.

So now that the “pro-consumer” hypocrisy of ATVA and ACA has been exposed, let’s state an unvarnished truth about broadcasters: Local TV stations are not in business to deny people our programming.  A loss of viewers means loss of ad revenue. Because, unlike the cozy world of pay television, broadcasters don’t get away with charging for a service we don’t provide.

That’s why 99 percent of retransmission consent negotiations are successfully completed — with little commotion and no disruption to viewers.  You would be hard pressed to find an example of a 99% success rate considered a failure (I know, Siri told me).

Let’s recall that the Federal Communications Commission has looked time and again at the issue of retransmission consent, and has wisely chosen not to meddle in the free market. The FCC, under former Chairman Julius Genachowski and current Chairman Tom Wheeler (neither of whom will go down in FCC annals as “pro-broadcaster”) conducted thorough retrans reviews. Both the Genachowski FCC and Wheeler FCC ruled against tipping the retrans scales in favor of ATVA and ACA.

Per Wheeler: “What we need is not more rules, but for both sides in retransmission consent negotiations to take seriously their responsibility to consumers, who expect to watch their preferred broadcast programming without interruption and to receive the subscription TV service for which they pay.”

Value of Localism

Broadcasters do take seriously our responsibility to consumers –the tens of millions of viewers who tune in to local TV every day. That’s why stations re-invest retransmission consent coin into local news, investigative journalism, lifesaving emergency weather reports, charity fundraising, AMBER Alerts and, of course, the most watched programming on television.

Retransmission consent revenue also enables broadcast networks and local TV affiliates to continue carrying the NFL playoffs, the Super Bowl, the World Series and The Masters. On broadcast television, those shows are available to everyone, and most importantly to the nearly 20 percent of Americans who can’t afford or choose not to subscribe to pay TV. If ATVA and ACA have their way, all marquee sporting events will migrate to a pay TV platform. Any guess who would foot the bill for that?

Bottom line: ATVA and ACA members have spent more than three decades decrying government intervention in the pay TV business. “Keep Washington Out” has been pay TV’s rallying cry beginning with 1984 cable deregulation. That continued with the 1992 Cable Act and the 1996 Communications Act, and is the pay TV mantra today over issues like net neutrality, ISP privacy regulation, and the AT&T/Time Warner merger.

Yet when it comes to free market broadcast/pay TV retransmission consent negotiations, ATVA and ACA are first in line, hat in hand, clamoring for help and salvation from Washington. The game plan of some ACA/ATVA members seems well-rehearsed: Refuse to engage in serious retrans negotiations; try to force a disruption in service; blame “greedy” broadcasters for difficult negotiations; and whatever you do, don’t acknowledge that the vast majority of retrans deals are completed successfully. And oh yeah, hope for a Beltway bailout.

Shameless? Yes.

Pro-consumer? Hardly.

We won’t hold our breath, but perhaps 2017 will be the year when the ACA/ATVA game playing stops. That truly would be a benefit to all pay TV watchers.

Press Contact

Casey Mohan

cmohan@tvfreedom.org

(314) 795-8235

Read More

Cable Claus is Coming to Town to Fill Your Stockings With “Surcharges”

It’s that time of year again! It’s time for stockings, decorations, caroling, gingerbread lattes, the smell of evergreen and roasting chestnuts, the feel of a letter from your pay-TV company telling you – again – that your rate for the upcoming year is about to increase.

Wait … what?

Perhaps you forgot – because it’s been a whole year – that in addition to Santa Claus and his reindeer, the holidays are also the time of the year when his not-so-jolly cousin, Cable Claus, comes to town too. Or maybe you just wanted to forget. Cable Claus doesn’t bring fun presents like Santa. There’s no rocking horse or bow-wrapped Mercedes in your driveway. Nope. Instead, Cable Claus makes it harder to buy those things. He delivers a nasty little letter to your mailbox telling you how much your cable bill is going to increase for the upcoming year. If you thought 2016’s rates were too high, 2017 is going to be even more of a disappointment.

You may not have noticed that Cable Claus has already visited you. The letter he delivers might look like one of those useless “privacy updates” we all get – full of legal jargon and confusing data. Even if you read Cable Claus’s letter, you may not understand that your cable prices are about to go up, up and up again, like Rudolph on December 24. Why? Because pay-TV companies have gotten very clever in the way that they increase your cable bill.

You know how airline companies have steadily increased all the fees that used to be simply included as part of your ticket fare? They charge extra for bags (checked and unchecked), food, water and any seat other than a middle seat in the last row. One airline even charges you $10 to have an agent at the airport print out your boarding pass. Basically you have to be willing to fly naked, with no baggage, inside a giant envelope to actually pay just the standard ticket fare these days. Human mail, if you will.

Well, pay-TV companies are equally good at this game. While they have increased their programming package rates at a pace that’s roughly double inflation (congratulations, guys!), they have been steadily hammering their customers with additional and rapidly increasing “fees” or “surcharges” that they often lump together on your bill with government-mandated taxes. Depending on your pay-TV company, these fees could include a “broadcast TV fee,” a “regional sports fee” or an “entertainment network surcharge.” If you are an RCN subscriber in Washington, D.C., for example, you will pay an astronomical $17.85 per month in “surcharges” above and beyond your package price (and equipment charges). And these surcharges aren’t even itemized on their rate card. Instead, they appear in the tiny, tiny fine print. $214 per year hidden in the fine print.

Now, lest you think you’re getting something extra for all those surcharges, think again. All of these fees are for programming – broadcast channels, sports channels, top entertainment cable networks – that you already pay for in your TV package. It would be like the airlines charging you a “pilot fee” or a “pressurized cabin surcharge,” and only telling you after you bought your ticket.

Unsurprisingly, some customers – and their lawyers – have started to notice. Lawsuits against two major cable companies have appeared in the last few months, alleging, among other things, false advertising and billing fraud because of their use of these “surcharges.”

But there is no sign these lawsuits are slowing down the pay-TV companies. Cable Claus continues to drop his “presents” all over the country – announcing even higher fees and surcharges – even for those customers that thought they signed a “price-lock” contract. So be sure to check your stockings thoroughly, boys and girls. You may have gotten more than you wished for this year.

Read More

No Matter How You Slice It, Pay-TV Comes Up Short

By Robert C. Kenny | February 17, 2016

According to a new Harris Poll, pay-TV subscribers say their biggest concerns with their cable or satellite TV service are excessive equipment rental fees (21%), poor service/connection quality (17%) and poor customer service (13%). It’s appalling that these problems have been plaguing pay-TV subscribers for two decades with no sign of improvement.  When will it all end?

If ATVA really cared about the American television viewer, and, in particular, satellite TV and cable subscribers, then it would work with its pay-TV member companies to develop a core set of consumer-friendly policies that would truly help improve the pay television experience.  The industry’s narrow focus on broadcast TV programming costs misses the forest for the trees and does nothing to help the consumer.  It’s time for pay-TV companies to stop playing the blame game and adopt real change.

To view the infographic, please click here.

Read More

CALLING BIG PAY-TV’S “CHICKEN LITTLE” BLUFF

Since when has the FCC ever fallen for misleading and exaggerated claims by industry players?

By Robert C. Kenny | February 16, 2016

Over the past year, broadcasters like Gray Television, TEGNA, Quincy Media and E.W. Scripps have reached hundreds of retransmission consent deals with pay-TV companies without any programming disruptions for subscribers.

The fact is that thousands of deals have been reached over the past five years without programming disruptions. New data shows that U.S. households subscribing to pay television are more likely to experience local TV interruptions from electrical outages than retransmission consent disputes.  At bottom, over the past five years, only 0.01 percent of interruptions to pay-TV subscriber television viewing hours have been due to local TV station impasses.

Despite this, the Federal Communications Commission (FCC) is proposing dramatic changes to the agency’s “totality of circumstances test” for retransmission consent negotiations that would ultimately create a regulatory imbalance favoring America’s least favorite companies – “Big Pay-TV” players like DISH, DirecTV and Time Warner Cable who receive failing grades in terms of customer satisfaction surveys.

Local TV stations are simply working to secure fair compensation for their most-watched news and programming from pay-TV companies who then sell it as part of programming packages to subscribers. That’s only fair — after all, it’s the marquee entertainment programming and local news provided by broadcasters that helps make pay television subscriptions so appealing to consumers. So why is the pay-TV lobbying so hard for regulatory changes that would hamstring local TV stations?  It’s simply to pad their outrageous profits margins. Nothing more.

Make no mistake: pay-TV customers won’t see a dime in cost-savings if government intervenes in retransmission consent negotiations on behalf of the pay-TV industry. So much for protecting consumers’ interests.

At bottom, the pay-TV lobbying machine, led by the American Television Alliance (ATVA), plays fast and loose with the facts, and has created a fake retransmission consent crisis to pad profit margins for “Big Pay-TV.”  Truth be told, the prevalence of successful retransmission consent deals demonstrates that the sky is not falling and there’s no retrans crisis in America. ATVA’s Chicken Little mentality amounts to nothing more than a scare tactic.

It’s clear that the FCC proceeding is being driven by the bad behavior of America’s satellite TV and cable giants.  Since when has the FCC ever fallen for misleading and exaggerated claims by industry players?

It’s interesting that satellite TV and cable companies which have, for years, consistently lobbied for government to stay out of its way, is now urging the FCC to more heavily regulate one of its biggest competitors: local TV stations.

The regulatory changes being suggested by the big pay-TV industry won’t save customers any money on monthly cable bills.  Given pay-TV subscribers’ distrust and utter disdain for the pay-TV industry, it would make more sense for regulators to address deceptive pay-TV billing and advertising practices that have plagued subscribers for the past 20 years.

The FCC has a real opportunity to help consumers. Fixing a retransmission consent system that clearly isn’t broken is not the answer.

Kenny is director of public affairs for TVfreedom.org, a coalition of local broadcasters, community advocates, network TV affiliate associations and others advocating for preserving the retransmission consent regime. He is a former press secretary at the FCC.

Read More

U.S. Consumers Fed Up With Negligent Pay-TV Practices

By Robert Kenny | February 15, 2016

According to a new Harris Poll, nearly everyone says that pay-TV services are more expensive than they should be and one in two American’s portray pay-TV service providers as greedy business people, who are making the experience relatively unaffordable.  As for DVR/cable box rental fees, 79 percent of Americans believe they are too high and it remains a top concern for subscribers.

With that backdrop, we thought you may find the following infographic illustrating pay-TV subscribers’ biggest concerns about their pay-TV service of interest.  Notwithstanding the overall cost of the monthly bill, pay-TV subscribers say their biggest concerns with their cable or satellite TV service are excessive equipment rental fees (21%), poor service/connection quality (17%) poor customer service (13%), and complicated billing (10%).

Many subscribers had other issues that were very concerning, such as difficulty canceling service or attempting to downgrade their programming packages to save money.

It’s time for ATVA and its member pay-TV companies to address true consumer harms related to outrageous annual price hikes, poor service quality, excessive equipment rental fees and deplorable customer service.

To view the infographic, please click here.

Read More

The Great Pay-TV Rip-Off

Greedy pay-TV companies have built a $100 billion per-year industry on the backs of the American consumer… and here’s what they get in return…

By Robert C. Kenny | February 8, 2016

To reporters covering the U.S. video marketplace, we thought you might find the following infographic of interest.  It highlights the fact that U.S. pay-TV companies collectively generate $100 billion per-year on the backs of the American consumer.  Despite these sustained annual revenue gains, cable and satellite TV companies have failed to improve the customer experience in more than 20 years.  Instead, pay-TV companies use bait and switch billing to lock customers into multi-year contracts, only for those customers to see their monthly bills increase as much as $40 or $50 per month in year two of the contract unless they downgrade their TV programming package.  Sadly, tens of millions of customers have to deal with unreliable service, excessive equipment rental fees and deplorable customer service when attempting to address any number of problems with their pay-TV service or monthly bills.  Moreover, pay-TV subscribers are forced to deal with frustrating erroneous billing charges or rogue customer service agents.  Indeed, some pay-TV companies impose a two-year contract on subscribers with early-termination fees that start at $480.

Enough is enough.  Consumers deserve better from their cable and satellite TV companies. #payTVgreed

To view the infographic online, please click here.

 

Read More

America’s Most-Watched News and Programming

To reporters following the U.S. video marketplace:

We thought you might find this infographic of interest. The infographic is based on recent data verifying that broadcast television news and programming remains the most-watched programming with 77 percent of Americans watching local TV newscasts, primetime network shows and live sports on a regular basis.

You can view the infographic here.

 

 

Read More

It Would Be Funny If It Weren’t True

With the majority of America’s pay-TV subscribers expressing dissatisfaction with their cable or satellite TV providers through consumer-oriented surveys and social media platforms, the pay-TV industry recognizes that it has a tarnished reputation with the public. 

Millions of pay-TV subscribers annually look for competitive alternatives to their current service, prompting companies to launch extensive PR campaigns that use humor to poke fun at their own problems or to magnify the issues consumers have with their competitors – all built on the premise that their customer service is improving.  

The inability of the pay-TV industry to do away with bait and switch billing and advertising practices and its failure to adequately address billing errors, poor service quality and deplorable customer service has created a quarterly round-robin of musical chairs in which subscribers switch to another service provider after their contract runs only to end up experiencing similar problems with their new service providers.

Companies like Time Warner Cable (TWC), believes the answer to low customer satisfaction ratings is to introduce humor into the conversation.  In a recent commercial, TWC makes fun of its long customer service call wait times and its inability to honor in-home service appointments, but says it’s committed to making it all better.  All promises from a company with the lowest customer satisfaction rating in the country. 

Then there’s the commercial by DirecTV that uses humor to take a shot at future potential cable mergers (i.e. the proposed Charter/TWC/Bright House Communications deal), suggesting that their customer service and service quality are superior to what cable TV competitors have to offer.  Some cable companies have countered these attacks with their own marketing strategies that push back on DirecTV’s business model, labeling it “yesterday’s technology today” and alleging that it’s just “TV from space” that often fails in inclement weather.

The Dish Network has a new commercial out this month attempting to demonstrate how DirecTV costs nearly three times more to subscribe to than its satellite TV service, mocking the fact that DirecTV hits subscribers with extra charges for premium cable channels and regional sports networks, in addition to annual monthly bill increases.

These commercials are aimed at drawing in new customers or to persuade old customers to comeback.  We get it.  But at the end of the day, empty promises by the industry will not improve the experience or quality of service for pay-TV customers.

On any given day, a visit to Downdetector.com, will show dozens of network service outages affecting tens of thousands of pay-TV/broadband subscribers across the nation – and they have nothing to do with programming disruptions.  Scores of consumer complaints about personal pay-TV horror stories emerge on Internet social media sites daily.  The problem is so prevalent on social media message boards that pay-TV companies, themselves, are acknowledging that things need to improve.   Unfortunately, positive industry changes to improve the customer experience are slow to materialize. 

If cable and satellite TV companies don’t voluntarily demonstrate to the public how they’ll proactively address subpar service quality, and bait and switch billing, then Washington’s policymakers should take action requiring the industry to be more open and transparent about the quality control measures they’re putting in place to address these widespread and pervasive market failures. 

The anti-consumer tactics being used by the pay-TV industry to increase subscribers’ monthly bills can’t simply be fixed or laughed away with humorous commercials.  It’s time for the industry to take real action to eliminate the consumer inequities that have harmed consumers for decades.

A commitment to dramatically improving customer service would be a positive start.   

Kenny is director of public affairs for TVfreedom.org, a coalition of local broadcasters, community advocates, network TV affiliate associations and others advocating for preserving the retransmission consent regime. He is a former press secretary at the FCC.

Read More