The Pac-12 has ramped up its attempt to bring DirecTV into the fold.
Bud Withers (Seattle Times) reports on the Pac-12's new ad campaign here.
Click here for the Pac-12 press release, which includes links to all versions of the TV spots.
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8 comments:
I have been a DirecTV customer for more than 8 years and I strongly resent the PAC-12's effort to make me switch.
I have used Dish at a friend's house; its picture quality is clearly lower than what I get and its DVR user interface is far inferior to the DirecTV DVR UI. I am familiar with Comcast as having the worst customer service of any company in the USA. I watch my DIrecTV system 3 to 5 hours a day -- why on earth would I downgrade a satisfactory system to get programs I might watch 3-5 hours a month?
The point at issue is, which DirecTV subscribers will bear the per-user subscription fee that a provider must give PAC-12 for the right to distribute its content.
If I understand the problem, DirecTV is willing to carry the PAC-12 network either as an extra-cost package or as part of their existing $13/month sports pack (which includes all the Fox regional nets and several other sports channels, 35 channels in all).
In this case, the PAC-12 subscriber fee would be paid only by DirecTV users who opt for it. I already pay the $13/month for the sports pack and I would be happy to pay $2-$3 more for PAC-12, either as a stand-alone option or as an increase in the price of the sports pack.
PAC-12 however refuses this offer and insists that DirecTV carry it as part of the basic channel line-up, on a par with ESPN1 and ESPN2. That would mean that PAC-12 would receive a fee from DirecTV for every DirecTV subscriber, whether they watch it or not, just as ESPN gets a fee for every one of the 35.5 million DirecTV subscribers whether they watch it or not.
This would mean that DirecTV would either have to accept an income reduction of a few dollars per subscriber, or raise subscription fees across the board, or both. DirecTV does not see this as a good deal. It would be an excellent deal for PAC-12, giving them a guaranteed cash flow from 35.5 million users instead of the subset who are willing to pay for an optional package.
PAC-12 maintains that they have already secured the same deal from Comcast, and presumably fears that if they accept optional-package status from DirecTV they'd have to renegotiate with Comcast. But why?Comcast must have thought that PAC-12 would increase their audience by enough to compensate for the PAC-12 per-subscriber fee. Why would they change their minds now?
Also note that PAC-12 claims to have negotiated an all-subscriber agreement with AT&T for the UVerse system. However, this "in principle" agreement has not been finalized and AT&T does not yet carry the PAC-12 channel, with the first football games only a few weeks away. Perhaps AT&T is cagily awaiting the outcome of the DirecTV negotiations before they move -- and that could be why PAC-12 is suddenly willing to spend money on a very hostile ad campaign.
Thank you, David. My family would kill me if I ever made us switch from DirecTV. Pac-12 seems to be working hard to prevent DirecTV from being able to offer it to its customers.
It astonishes me that they refuse to grow the game by (at the very least) allowing online access to the games (other than those who are currently Comcast or Dish subscribers).
Does Larry Scott have a personal beef with DirecTV or something? This latest campaign is embarrassing.
At the SJ Merc, John Wilner weighs in with a blog post that has a fact I didn't know:
"The Pac-12 is charging distributors about 80 cents for in-market subscribers, and most major carriers (Comcast, Time Warner, DISH) clearly believe that’s a reasonable price point."
He seems to think that number is the point of contention. I had gotten the impression from previous news items that the issue was basic-plan versus optional, as I said above.
In a blog post at SB Nation writer Avinash Kunnath claims that PAC-12 Networks has begun to show up in the AT&T UVerse schedule, despite the lack of a finalized agreement.
A very interesting set of comments.
Here's the scoop. From the Pac 12's point of view, they cannot agree to Direct TV terms without renegotiating their contract with every single distributor now on board. The other distributors presumably have insisted on "most favored nation" clauses: clauses that guarantee them the same favorable terms granted to ANY OTHER distributor. So if the Pac 12 agrees to Direct TV's terms, they risk losing very (and I mean VERY) substantial revenues. The Pac 12, just like every other programmer of sports or non-sports TV, wants to be in the expanded basic bundle because this guarantees the largest viewership and the largest advertising revenue. It's all about money. Is the Pac-12 being selfish? Of course, but they are no different than any programmer seeking to maximize revenues.
The system is broken -- badly broken. Every other conference in the country will insist on the same thing -- carriage in the basic bundle. Every other pro sports team also tries for this. So does every non-sports programmer. The bundle gets larger and larger -- and more and more expensive. The average pay TV subscriber pays over $90 a month today, with the bill likely to increase to $125/month within the next few years. Most of this increase will be due to sports programming.
This may come as a surprise to those of us who are sports fans, but only about 20 percent of TV viewers regularly watch sports. That means that 80% of viewers are paying for something they don't care to watch. That's wrong, any way you look at it.
So what's the answer? More choice in allowing consumers to pay only for what they want to watch. The programmers (not just the Pac 12 but all programmers) won't agree to this because they know they will lose very substantial revenue. But it will eventually happen.
Here are some ways this could happen. Enough consumers could revolt against the elephantine bundles, cutting the pay TV cord, and forcing TV programmers to abandon their bundling strategy. But this could take years to happen. The FCC could step in to regulate bundling (but the programmers will fiercely lobby against this). Senator John McCain's bill could pass Congress (it would require a la carte programming). But the McCain bill also faces heavy lobbying obstacles. Finally, and this is my preferred option, antitrust litigation that is underway in California and on the East Coast could force an end to programmer bundling restraints.
That litigation will be fiercely contested by programmers, but it has a meaningful chance of success (my assessment as someone who teaches and writes about antitrust law).
Warren Grimes
I forgot to mention the Pac 12's advertising campaign to try to force Direct TV to yield to the Pac-12's terms. It is exactly the same thing that CBS is doing in its campaign to force Time Warner Cable to agree to CBS' terms. The programmers always hold the cards in these disputes. Why? Because consumers, however reluctantly, can change distributors if they really want the programming. That puts enormous pressure on the distributor to agree to the programmer's terms. CBS has now set up a web site inviting Time Warner Cable subscribers to switch to another distributor.
These are hard nosed disputes about money. And the consumer is the victim, because rates just keep on climbing (and we still have no meaningful choices). Yes, the system really is broken. I am still cheering for the antitrust solution.
Warren Grimes
In a blog post at the SJ Merc, John Wilner writes about the PAC-12-DirecTV fight, saying much the same thing as Warren says in his second comment.
Interesting quote from Wilner:"I couldn’t help but notice that Fox Sports 1 last week reached a last-minute carriage deal with DirecTV, DISH, Time Warner and others … but only after reportedly dropping its asking price from $0.80 to $0.23 per subscriber."
If the new Fox Sports 1 with a national focus on all sports is willing to go that low, can a network with only regional, collegiate offerings demand more?
I have read in the LA Times that the Pac 12 is getting around $2 per subscriber. If that's so, that's way more than Fox Sports received for Sports I. These issues are tricky because, although Fox Sports I is national and Pac 12 is primarily regional, the high degree of loyalty of many regional viewers to Pac 12 programming may allow the Pac 12 to extract a higher per subscriber price. So yes, it is quite possible that the Pac 12 can ask for and get more than Fox gets for its national channel. The loyalty to that national channel may be relatively low, especially with so many other national channels already in the mix.
If consumers had more choice in what channels they wished to purchase, the programmer would be disciplined in its pricing and able to charge no more than interested viewers would be willing to pay. I'd gladly pay $2 a month for the Pac 12 network -- I'm not sure what if anything I'd pay to watch the new Fox Sports channel.
Warren Grimes
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