There is no doubt that when it comes to television content, football is king. However, Dish CEO Charlie Ergen is standing by his decision to allow a deal to expire that saw local networks dropped from Dish Network ahead of last fall’s NFL season due to retransmission fees being charged to carry networks owned by local TV giant TEGNA. It is also the primary reason why their streaming service, Sling TV, only carries owned-and-operated FOX and NBC locals.
Retransmission fees (“retrans”) are the fees that corporate broadcast stations charge cable and streaming providers for the right to air local content.
On Dish’s Q4 2021 earnings call on Thursday, Ergen acknowledged that the situation was not ideal for either side, but appeared to imply that the dispute might have led to lower asking price for TEGNA, which was acquired by private equity firms Standard General and Apollo Global Management earlier this week.
“I’ve always felt that any time you get into a program dispute it’s a lose-lose; it’s never a win-situation for one guy or the other,” Ergen said. “TEGNA lost a fair amount of capital for us; they probably sold their company a little bit cheaper than they otherwise would have.”
Ergen reiterated a point that he has been championing for quite some time, saying that “the value of retrans is going down, not up.”
The CEO pulled back the curtain a bit in order to explain the process by which the company approaches retrans deals to determine if they are worth the investment from the company and additional cost to customers.
“We’re unique maybe as a company, but we do look at the value of the programming to our customers,” he said. “We have real-time data, we know how many people watch it, we know how long they watch it. We can use an algorithm to come up with a pretty good range of where we think the value of the programming is. We always then will overpay, we will always overpay because we have to value the customers that we lose.
“Then we have a number, and if we’re at X and somebody’s at 2X, we’re not going to carry it, because it’s more beneficial for us not to pay the money. If they get to X, we’ll do a deal. If they’re X+1, we won’t do a deal. TEGNA was 2X, it didn’t happen. We lost subs, they lost revenue. But when football season was over … where was the leverage?”
Unlike Dish and Sling TV, YouTube TV wasn’t willing to play hardball with networks when it came to football content last season. In October 2021, the live-TV streamer made a deal with NBCU to keep the company’s channels on the service just as the NFL season was heating up.
Then in December, in the final weeks of the NFL regular season, YouTube TV signed a deal with Disney to bring ESPN, ABC, and other networks back to the platform.
NBC is the exclusive home of the NFL’s “Sunday Night Football,” while ESPN airs “Monday Night Football.”
Despite the fact that the dispute between Dish and TEGNA did lead to some subscribers exiting the streamer, Ergen says that the majority of customers understood and appreciated the company’s decision to stand firm. Earlier this month, the two sides reached a deal to bring 64 local affiliates back to the streaming service.
“More than you would think of our customers agree that they don’t want their costs going up, and they appreciate the fact that we’re not willing to roll over and play dead in negotiations,” the CEO said. “At the end of the day, we got to a fair deal with TEGNA that’s beneficial to both parties and beneficial to our consumers, so we don’t have to raise their price as much as everybody else is going to have to raise prices.”
When it comes to retrans fees, Ergen got in one last parting shot, saying, “It will die a death on its own if people try to overcharge for their product … we’ve seen that with other programers who just refused to see where things were going and at some point they self-destruct.”
Sling TV
Sling TV is a live TV streaming service that helps users save money with the option of two distinct plans. The $40/month “Sling Orange” plan offers about 30 channels, including Disney Channel and ESPN. The $40/month “Sling Blue” plan offers about 40 channels, including Fox and NBC local channels.