Posted on Friday, July 6th, 2012 at 12:28 am
Author: s.e. smith
Disclosure: I work for the Sundance Channel, an AMC property.
On 1 July, Dish Network subscribers looking for the Sundance Channel, AMC, WE, IFC, and more had to look elsewhere—because an ongoing dispute between parent company AMC Networks and Dish ultimately ended in a contract expiration at midnight on 30 June. The bitter and very public feud dragged on until the last possible moment, but Dish stuck to its position, refusing to renew the contact and continue carrying AMC’s offerings. The two have radically different explanations for the dispute, and both highlight emerging issues in a new media landscape.
Such carriage disputes are not new; DirecTV and Fox, for example, squabbled last year and ultimately reached a resolution that satisfied both parties. Fights characterised by service interruptions and pointed advertisements encouraging fans to take their complaints to their cable providers are not unusual, but this one was particularly vicious, and perhaps especially important.
Dish Network serves 14 million customers, making it a critical distribution network for companies like AMC Netweorks. When the company announced it would no longer be carrying AMC’s offerings, it cited several issues, including the practice of bundling; AMC, like many other content providers, forces distributors to buy a package of shows rather than being able to pick individually. Thus, it used AMC’s hit status with shows such as Mad Men and Breaking Bad to oblige Dish Network to pick up offering like IFC.
Bundling, Dish Network claimed, made the deal too expensive, and the company argued that AMC’s numbers didn’t make up for the higher cost. The network also claimed that AMC’s practice of releasing episodes of hit shows soon after airing on services like iTunes was hurting its bottom line and providing a disincentive for cable subscribers. The company attempted to force AMC’s hand and negotiate a drop in prices or a debundling, but AMC Networks stood its ground, so Dish pulled out its next weapon in early June, when it became evident that the dispute was going to turn vicious.
Starting in early June, AMC’s offerings were moved to different channels, forcing fans to make a hop down into infomercial territory to catch their favourite shows. No longer situated in the primetime range for channel-flipping, AMC knew it would experience a numbers drop, right before the season finale of Mad Men and in the leadup to the premiere of Breaking Bad. Dish counted on hitting AMC where it would hurt most.
AMC fought back, enlisting Mad Men as a spokesshow in full page ads encouraging fans to take their grief to Dish Network and adding interstitial ads to the websites of many of its holdings. Dish remained unmoved, sticking to its original points of contention and refusing to back down. Despite AMC’s pressure, its entire lineup disappeared from Dish Network’s lineup on 1 July. Dish replaced AMC’s offerings with HDNet, a ‘men’s interest’ assortment of programming which is unlikely to satisfy the appetites of fans used to the likes of The Walking Dead.
Despite the fact that many subscribers will probably be less than thrilled with this tradeoff, Dish has no plans to lower subscription prices for its viewers; it argues that it removed some programming and replaced it with others, and thus people can expect to pay the same for access. Some subscribers undoubtedly disagree, and it’s likely there will be a consumer revolt in the coming weeks as the consequences of the Dish-AMC dispute settle in; particularly in advance of the much-anticipated Breaking Bad season premiere. Savvy subscribers may be wondering if they can renegotiate their own contracts with Dish by threatening to drop their subscriptions unless the network lowers their fees; perhaps they will have better luck than the embattled AMC.
AMC has a very different explanation for the dispute; it claims that the origins actually lie in a lawsuit stemming from a 2008 programming battle. AMC subsidiary VOOM was dropped from Dish in 2008, in what AMC claims was a breach of contract. The two have been litigating over the matter ever since. In a series of escalating press releases and advertisements, AMC took very public swipes at Dish, implying that the network was having its revenge over the VOOM HD litigation.
Officials at AMC must be stinging after their ignominious drop from Dish programming. Not only did their public shaming campaign fail, but their viewer numbers just fell drastically in response to the programming shift. Over the course of June alone, numbers dropped 21% due to the change in channel location, and without any coverage on Dish at all, AMC can expect to see further decline in July; right when it wants to see viewer numbers going up in correspondence with a new season of Breaking Bad.
As the Dish dispute grew ever more acrimonious, AMC was able to manage a last-minute negotiation with AT&T U-Verse to keep its offerings flowing to subscribers of that service. It’s made pointedly sure that as many people as possible are aware of this fact, casting Dish as a villain in press releases shaming the company for not meeting AMC in the middle on the contract resolution. Bus ads for the premiere of Breaking Bad in cities like New York have also included a note reminding viewers that one place they won’t catch the show is on Dish.
This very public fight is a sign of more to come, not just from AMC and Dish but from other content creators and carriers. Such contract disputes may grow more aggressive as networks like Dish struggle with the rise of on-demand streaming and downloads, services demanded by many users who want to be able to access television on multiple devices and on their own schedules. Other users want to decouple themselves from cable providers entirely, and rely on tools like iTunes releases to pick up the latest shows, a trend that clearly threatens the cable industry, which explains why it is digging in its heels over distribution deals.
As overall costs of cable subscriptions rise and networks use bundling to their advantage, cable companies will be increasing their resistance to being forced to pick up channels with much lower commercial appeal alongside more flashy offerings. They may also be heartened by Dish’s apparent ‘win’ in the AMC dispute. That means more pushes ahead to put a stop to bundling, which could be bad news for lesser-known labours of love.
If the only way to get AMC back on dish is to drop IFC from the bundle, for example, the parent company may eventually cave in order to get AMC viewer numbers back up, which means IFC will take a big hit that it may not recover from. If Dish is successfully able to strong-arm AMC into complying with the terms it wants, other cable providers may get the same idea, which could result in a radical shift in the programming landscape, and one that might not work out well for consumers interested in more diversity, not less, in their cable offerings.
As cable becomes increasingly an art form, with some of the most critically-acclaimed shows of the last few years appearing on cable, networks are zeroing in on where the profits lie. That means less time for what they view as chaff, but what some viewers may consider critically important and interesting offerings.
Could such disputes lead to a turn away from the traditional cable distribution model? Viewers are often as frustrated with bundling as cable providers, since they want to be able to pick and choose the shows they pay for, and online streaming or distribution models allowing them to individually select their subscriptions could create an access method they prefer. If that’s the case, that could be very bad news for cable networks, and potentially very good news for companies like AMC, with the foresight and skills to put high-quality shows into development and wait for them to grow an audience.
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