DIRECTV Ends National NBC Test as Network Reaches Affiliate Agreement with TEGNA; Local Channels Still Blacked Out
Now into the second month of a carriage dispute with TEGNA, last week DIRECTV experimented with broadcasting a national feed from NBC to customers whose local affiliate had been blacked out. However, despite reports to the contrary, a DIRECTV spokesperson has confirmed to The Streamable that “the tests with NBC are over.”
- DIRECTV’s test came just days before NBC announced a new affiliate agreement with TEGNA.
- The experiment was designed to provide DIRECTV with potential alternatives to impacted customers.
- DIRECTV’s CCO told The Streamable that the test could be a model for future negotiations to keep prices down.
In November, 64 TEGNA-owned stations across 51 markets were blacked out on DIRECT, DIRECTV STREAM, and AT&T U-Verse as the two sides could not agree on a new retransmission deal. Many of those local channels are NBC affiliates as TEGNA is the largest independent owner of local NBC stations in the United States.
However, last week, customers reported having a new national NBC feed on their channel guide, just a few spots away from where their TEGNA-owned affiliate normally would be. However, that test has run its course according to DIRECTV, and the satellite and streaming provider is continuing to explore ways to provide customers with the programming that they want, without having to dramatically increase prices. Rate hikes generally follow every new carriage and/or retransmission deal signed between channel owners and pay-TV or streaming distributors.
“We were testing some capabilities as we explore alternative delivery options to help offset the rising costs of retransmission consent,” a DIRECTV spokesperson told The Streamable.
The timing of DIRECTV’s test is interesting considering that NBC and TEGNA announced a new affiliate agreement on Wednesday, Jan. 3, just days after the test concluded. The two sides have come together for a multi-year deal that renews the affiliate agreements in 20 markets across the country covering over 21 million homes.
This is curious because negotiations — either between networks and affiliates or distributors like DIRECTV and affiliates — are all about leverage. If both NBC and DIRECTV could show that they were working on ways to provide programming to customers without having to involve TEGNA, that could have a significant impact on how and when deals are done. Last year, while CBS and its affiliate board were locked in a contractual stalemate that took channels off the air for some providers, Fubo — who was essentially collateral damage in the process — began broadcasting the Eye Network's national feed so that customers would be able to watch at least some of the programming that they had become accustomed to. DIRECTV’s test was essentially doing the same thing.
While DIRECTV has ended its experiment with NBC, in The Streamable’s expert opinion, having covered the streaming industry since 2017, a move like this would behoove both the distributor and the national network. Not only would it allow DIRECTV to show TEGNA that it was willing to move on — even temporarily — from carrying the impacted affiliates, but it would also show the station owner that NBC was willing to do so as well.
In both cases, this would weaken TEGNA’s negotiating power, lowering the retransmission fees that they were able to extract from DIRECTV, while NBC could also potentially get a better deal when it came to its now renewed affiliate agreement with the 20 local NBC stations.
“Tegna continues to be an important partner to NBC, bringing our loved, must-see programming to top markets across the United States,” NBC’s president of affiliate relations Philip Martzolf said of the deal. “This renewal comes at the perfect time as NBC returns to primetime with midseason programming this week, as well as prepares for two of TV’s biggest moments in the election and Summer Olympics later this year.”
Throughout the blackout, DIRECTV has been engaging in ways to lessen the burden on customers from offering gift cards to impacted customers or inviting them to apply for statement credits. However, the biggest swing that DIRECTV has made to curb the rising prices that are inevitably passed on to customers is with its initial offer to TEGNA to allow customers to subscribe to local channels individually at a price set by the station owners.
“This first-of-its-kind a la carte model would allow broadcasters to fully control the pricing for their stations based on quality and demand, facilitate a direct relationship between the stations and viewers, and most importantly return greater choice, control and value to consumers by allowing them to customize their packages and pricing,” DIRECTV’s proposal to TEGNA stated.
TEGNA dismissed this option as being unserious, but for DIRECTV’s chief content officer Rob Thun, this stance tracks with how affiliate owners tend to be more demanding with cable, satellite, and streaming distributors than they are with networks. According to Thun, this ultimately leads to higher prices for consumers.
“It sort of highlights the problem that we have with the station groups,” Thun told The Streamable. “When it comes to negotiating with the networks, they cower, because they’re afraid they’re gonna lose their station affiliations, and it’s guns a blazing with the distributors … It’s a very interesting dichotomy of behavior in negotiations around the same value chain.”
Before the tests began — or were even made public — Thun told The Streamable that hypothetically airing national network feeds instead of those from local affiliates would be possible on virtual multichannel video programming distributors (vMVPDs), and that it could make for a more financially beneficial situation for subscribers.
“We’ve got to rethink this whole thing,” Thun said in an exclusive interview with The Streamable. “Why do we have to go through this middleman who cranks up the price unnecessarily, and that, frankly, is an inefficient part of the value chain? Let’s extricate them because they’re the giant contributor to the problem right now of the crazy increases that we face. If we can at least take some of them out to take that piece out, it moderates the pricing to some degree; it doesn’t solve it, but at least it takes some of the unnecessary markup out, and maybe down the line they’ll do nonexclusive deals with broadcasters and then with distributors.”
Whether DIRECTV and NBC engage in a more long-term arrangement to bring the national feed to customers is yet to be seen, but it is clear that DIRECTV executives are open to any and all options to continue to keep subscribers’ bills down, especially because they know that rising costs will drive an increasing number of customers away from the service.
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