New Article on TW/Lin (WIVB) Dispute

[The Dean]

Your point of view is just that, a point of view. What many people forget (as pointed out by a previous poster) is that WIVB's signal can not reach Time Warner's full viewing audience. By Time Warner carrying WIVB, they increase WIVB's viewership, thus allowing WIVB to charge higher rates to their advertisers. That increased revenue because of this is payment enough in my opinion. Options that just are not there for cable channels.

 

I have a friend that works at WIVB. WIVB was financially sound up to this point. Now, things are not going well for them. Many part time employees and news reporters have been laid off. Local advertisers are pulling their adds, or not paying their bills because they were charged based on how many customers their adds would reach. Without Time Warner, WIVB can not reach those customers. With each day that passes, according to my friend, WIVB's managers are becoming more and more frustrated with executives at Lin-TV. With the weak Buffalo market, WIVB may reach a point of no recovery financially. WIVB may cease to exist. If that happens, no one is to blame but Lin-TV.

 

 

As I said in my original post:

Now, as most of you know, I have a background in this area (as do at least a couple of other TBDers). So, I'm not simply blowing smoke. But, don't assume that my opinion is correct, because it is my opinion.

 

It is costing WIVB a LOT of money, no doubt about it. It is likely hurting TW, as well. My original post makes it clear (I think), that there is enough blame to spread around.

 

But, you are incorrect that WIVB can't reach customers without TW. It can't reach TW customers, that's for sure...and that is a lot of people. Are you suggesting that suppliers simply give their products away to big distributors who do not want to pay for the product? Lin is fighting a battle of principle here, while (if the Variety facts are correct) TW is simply refusing to pay for WIVB's signal. I suspect there is more at play, though.

[Fezmid]

Negotiations with a company such as LIN are standard practice in our industry. The issue with LIN may only affect Time Warner Cable in the present, however it may affect other companies in the future. When companies like Dish Network, DirecTV, and Verizon have to re-negotiate their agreements LIN may also use the same tactics against them.

That quote from TW is hilarious because those three companies (well, at least Dish and DirecTV) have just recently completed negotiations with LIN-TV. The difference is that they did it before the drop-dead date, unlike TW. They're obviously trying to make customers say, "Oh, if I switch, the same thing will happen with whoever else I choose," and that's just not accurate.

 

What many people forget (as pointed out by a previous poster) is that WIVB's signal can not reach Time Warner's full viewing audience.

That's not entirely true. You'd be able to get the signal with a large, directional antenna with a pre-amp according to Antennaweb.org.

 

With the weak Buffalo market, WIVB may reach a point of no recovery financially. WIVB may cease to exist. If that happens, no one is to blame but Lin-TV.

Why would you hold TW blameless? They're both trying to throw their weight around, and the people who are suffering are customers and WIVB.

[DRutka]

As I said in my original post:

 

 

It is costing WIVB a LOT of money, no doubt about it. It is likely hurting TW, as well. My original post makes it clear (I think), that there is enough blame to spread around.

 

But, you are incorrect that WIVB can't reach customers without TW. It can't reach TW customers, that's for sure...and that is a lot of people. Are you suggesting that suppliers simply give their products away to big distributors who do not want to pay for the product? Lin is fighting a battle of principle here, while (if the Variety facts are correct) TW is simply refusing to pay for WIVB's signal. I suspect there is more at play, though.

What I am saying is that WIVB IS being paid for their product because of the increased prices they can charge with the increased viewership supplied by Time Warner.

 

If my point was mis typed about reaching customers, I am sorry. What I meant was that outside of the immediate Buffalo area, WIVB's signal is hard to pick up on an antenna. With Time Warner, these areas get WIVB, or recieve them with a clear signal.

[The Dean]

What I am saying is that WIVB IS being paid for their product because of the increased revenue they can charge with the increased viewership supplied by Time Warner.

 

If my point was mis typed about reaching customers, I am sorry. What I meant was that outside of the immediate Buffalo area, WIVB's signal is hard to pick up on an antenna. With Time Warner, these areas get WIVB, or recieve them with a clear signal.

 

 

I understood that, and the point remains there are alternatives to TW to get the signal.

 

TW is not paying WIVB simply by carrying them on their system. They pay the other providers for their content, why should they get WIVB's content for free?

 

If you are suggesting that TW carriage increases the value of WIVB to advertisers, you are correct. It is also true that WIVB increases the value of TW to their paying subscribers. Right now, people who pay TW $40+ for cable aren't getting their Bills games. Don't you think that is hurting TW?

[DRutka]

That quote from TW is hilarious because those three companies (well, at least Dish and DirecTV) have just recently completed negotiations with LIN-TV. The difference is that they did it before the drop-dead date, unlike TW. They're obviously trying to make customers say, "Oh, if I switch, the same thing will happen with whoever else I choose," and that's just not accurate.

 

I do not know where you recieved your information from, but any agreements that were reached in the past, with those providers, were before Lin-TV wanted all this money per subscriber. Now that Lin-TV wants money paid to them, they will have the same problem in the future with these providers.

 

That's not entirely true. You'd be able to get the signal with a large, directional antenna with a pre-amp according to Antennaweb.org.

 

So, more investments in more equipment. Just what the average person wants do do.

 

Why would you hold TW blameless? They're both trying to throw their weight around, and the people who are suffering are customers and WIVB.

I am saying it will be Lin-TV's fault because they are letting their station fail. If they would have left well enough alone, WIVB would have continued on in their profitable ways. Now they are losing money by the truck load. How is that Time Warner's fault?

 

I own a business. Say a supplier that is making money and is profitable suddenly wants to charge me more for their product. I decide to no longer carry their product. Because I am no longer carring their product, that company starts to lose money and eventually fails. Is that my fault? I don't think so.

[Offside Number 76]

I understood that, and the point remains there are alternatives to TW to get the signal.

 

TW is not paying WIVB simply by carrying them on their system. They pay the other providers for their content, why should they get WIVB's content for free?

 

If you are suggesting that TW carriage increases the value of WIVB to advertisers, you are correct. It is also true that WIVB increases the value of TW to their paying subscribers. Right now, people who pay TW $40+ for cable aren't getting their Bills games. Don't you think that is hurting TW?

 

Maybe it's not hurting TW in the short term as much as making a deal will hurt TW in the long term. Whatever resolution eventually comes out of this is going to set precedent for a LOT of markets. From the Variety article you posted:

 

"But in the next 12 months, biz veterans say the retrans wrangling will be intense because so many broadcasters are firmly focused on increasing the fees they command from local cablers. A slew of retrans deals for stations in medium- and small-sized markets will expire at year's end, setting the stage for more standoffs and possible blackouts a la Lin-Time Warner."

 

So it's definitely in TW's interest to put up a fight. Does LIN own so many stations (beyond the 15 stations in 11 markets at issue in the current dispute) that it's worth it for LIN to be fighting just as hard?

 

I'm not taking sides, by the way; just interested in the business issues.

[The Dean]

I do not know where you recieved your information from, but any agreements that were reached in the past, with those providers, were before Lin-TV wanted all this money per subscriber. Now that Lin-TV wants money paid to them, they will have the same problem in the future with these providers.

 

 

 

So, more investments in more equipment. Just what the average person wants do do.

 

 

I am saying it will be Lin-TV's fault because they are letting their station fail. If they would have left well enough alone, WIVB would have continued on in their profitable ways. Now they are losing money by the truck load. How is that Time Warner's fault?

 

I own a business. Say a supplier that is making money and is profitable suddenly wants to charge me more for their product. I decide to no longer carry their product. Because I am no longer carring their product, that company starts to lose money and eventually fails. Is that my fault? I don't think so.

 

 

You are mistaken, I am almost certain. TW was paying Lin, per subscriber, just as they pay EVERY cable and most broadcast channels. Now the contract is up for renewal. Lin wants a little more $ per sub, TW doesn't want to pay anything, now.

[The Dean]

Maybe it's not hurting TW in the short term as much as making a deal will hurt TW in the long term. Whatever resolution eventually comes out of this is going to set precedent for a LOT of markets. From the Variety article you posted:

 

"But in the next 12 months, biz veterans say the retrans wrangling will be intense because so many broadcasters are firmly focused on increasing the fees they command from local cablers. A slew of retrans deals for stations in medium- and small-sized markets will expire at year's end, setting the stage for more standoffs and possible blackouts a la Lin-Time Warner."

 

So it's definitely in TW's interest to put up a fight. Does LIN own so many stations (beyond the 15 stations in 11 markets at issue in the current dispute) that it's worth it for LIN to be fighting just as hard?

 

I'm not taking sides, by the way; just interested in the business issues.

 

 

Offering NOTHING for a product is not negotiation, IMO. It is extortion.

[Offside Number 76]

Offering NOTHING for a product is not negotiation, IMO. It is extortion.

 

You may be right, but that's not really the point of my post. I'm wondering why Lin is fighting so hard--does it have other contracts that are up for renewal in the future, so that the precedential value of this dispute is high enough to outweigh the short-term losses associated with decline in market share and ad revenue?

 

The regulatory scheme governing cable/local stations recognizes that cable extends a viewer base (because of higher quality picture and because cable reaches farther than do conventional antennas). For this reason, the regulations allow the station to demand that the cable company carry the station for free, if the station wants to. Lin is choosing not to do that, which is fine, but I'm wondering if it's a smart business decision, not if it's "right."

[DRutka]

If you are suggesting that TW carriage increases the value of WIVB to advertisers, you are correct. It is also true that WIVB increases the value of TW to their paying subscribers. Right now, people who pay TW $40+ for cable aren't getting their Bills games. Don't you think that is hurting TW?

Yes, it increases TW's value to their customers. But, TW does not have to carry WIVB if they do not want to. This might just be a financially responsible thing to do on TW's part.

 

WIVB will lose more without TW than TW without WIVB. Because of that, WIVB in a sense is already being paid. From what I have heard, it has NOT been a financially responsible decision for WIVB.

 

If WIVB folds. It will be Lin-TV's fault and no one else's.

 

And I don't care what is fair because of what is being charged by other stations. You have to do what is best for THIS situation and for this (WIVB) company. Sure they can use other stations as a negotiating point, but life is not fair and those other stations charges or whatever are irrelevant.

 

As any business owner would agree, if an employee used someone else's pay to negotiate their own pay, they would be told what other people make is absolutely none of their business, and if they do not like it, to go work elsewhere.

[Offside Number 76]

Yes, it increases TW's value to their customers. But, TW does not have to carry WIVB if they do not want to. This might just be a financially responsible thing to do on TW's part.

 

Actually, Lin can force TW to carry WIVB. Lin just can't force TW to pay for it. Here's the quote from the article:

 

The Federal Communications Commission rules laid out in 1992 give stations a choice every three years. They can opt for a "must-carry" deal, in which the local cabler doesn't pay the station but has to carry it in its basic package; or they can negotiate a "retransmission consent" contract on which there is no guarantee the sides will come to terms.

[The Dean]

You may be right, but that's not really the point of my post. I'm wondering why Lin is fighting so hard--does it have other contracts that are up for renewal in the future, so that the precedential value of this dispute is high enough to outweigh the short-term losses associated with decline in market share and ad revenue?

 

The regulatory scheme governing cable/local stations recognizes that cable extends a viewer base (because of higher quality picture and because cable reaches farther than do conventional antennas). For this reason, the regulations allow the station to demand that the cable company carry the station for free, if the station wants to. Lin is choosing not to do that, which is fine, but I'm wondering if it's a smart business decision, not if it's "right."

 

 

I bet you that Lin would allow the TW systems in the outer regions to carry WIVB for free, if the TW systems in the grades A and B signal area pay a premium for the product. The point is, it seems to be that TW is simply not negotiating. They are offering nothing and hoping that Lin will break from the financial pressure.

 

Now, the entire system (and philosophy behind) retransmission rules are very complicated and have a lot of history...far too much to discus here. Maybe I will teach a class in it, in the next year, or two.

[DRutka]

Offering NOTHING for a product is not negotiation, IMO. It is extortion.

 

But Lin-TV IS already being paid. What part of that do you not understand? They can charge way more to advertisers while on TW's system. That is their pay!!! Not being on TW's system decreases their advertising rates charged, thus losing money.

 

I'm wondering why Lin is fighting so hard--does it have other contracts that are up for renewal in the future

Ding, ding, ding, we have a winner.

[The Dean]

But Lin-TV IS already being paid. What part of that do you not understand? They can charge way more to advertisers while on TW's system. That is their pay!!! Not being on TW's system decreases their advertising rates charged, thus losing money.

 

 

No, that is not what TW pays other broadcasters and cable networks. You can think of it that way, if you wish, but on that point, you are simply wrong. TW charges subscribers for the content it delivers. It pays each content provider (or at least the vast majority) a small piece of that subscriber fee. They no longer want to pay WIVB their small piece of that fee.

[Offside Number 76]

I bet you that Lin would allow the TW systems in the outer regions to carry WIVB for free, if the TW systems in the grades A and B signal area pay a premium for the product. The point is, it seems to be that TW is simply not negotiating. They are offering nothing and hoping that Lin will break from the financial pressure.

 

Again, you may be right. At the very least, TW is using some strong-arm tactics. But will Lin suffer more by capitulating now or by putting up a fight? Does it have 45 or so other stations with retran agreements which are about to expire? That's not a rhetorical question--I really don't know the answer. But if the answer is yes, it makes sense to lose some money now. If not, well, I can't understand the business justification (has nothing to do w/ what is morally right) for their continued sustained losses.

 

EDIT: Ok. I've done some basic googling. Looks like Lin owns about 30 stations, 15 of which are tied up in this mess. Lin has to decide whether the money it's losing now will be offset in the future by both (1) any money it eventually receives from TW in a deal that resolves this dispute and (2) the future retran agreements for the OTHER 15 stations, which naturally will be affected by whatever happens here. So far, it looks like Lin thinks it will make more money long-term by fighting now.

 

I definitely don't have the figures necessary to say whether the strategy is smart. But my gut tells me that TW will squash Lin if this continues. TW is far bigger and can more easily absorb the loss of WNY and Green Bay customers who switch to dish or FIOS. Right or wrong aside, that's how I see the economics of it right now.

 

(Anyone have any idea when FIOS is coming to the City of Buffalo by the way? Seems I've been waiting forever.)

[DRutka]

If TW agrees to pay for WIVB's transmission rights, WIVB no longer has a say where they go on the channel line-up.

 

By Lin-TV letting TW carry WIVB for free, TW must carry WIVB in the lower channels and it must be on basic cable. I would find it quite funny if TW decided to pay for WIVB's signal, but then put them on an upper tier, digital channel. Then TW would have to pay less money to Lin because of the less households it reached. Lin-TV would be totally screwed.

[DRutka]

They no longer want to pay WIVB their small piece of that fee.

No longer??? They have not paid money to them in the past, they do not want to, and should not have to start now.

[The Dean]

No longer??? They have not paid money to them in the past, they do not want to, and should not have to start now.

 

 

Yes, they have. I'm not sure where you are getting your info. Lin is looking for an increase in the amount paid. TW is looking to pay nothing,

[MarkyMannn]

FIOS installation in 5 days and counting!!!

[DRutka]

Yes, they have. I'm not sure where you are getting your info. Lin is looking for an increase in the amount paid. TW is looking to pay nothing,

I do not know where YOU are getting your information from.

 

The old agreement between TW and Lin was the "free" agreement.

 

Lin would not charge a cent, but intern, TW had no choice but to carry WIVB and had no choice but to put them on a lower tier, basic cable available station.

 

By Lin opting for the "pay" choice, TW does not have to carry them, does not have to put them on a lower tier channel, and does not have to make them available to basic cable subscribers. Lin choosing this option is a set up to fail. Lin has the most to lose, and are foolish for going this route.