Wanna Make Your Point? Be More DIRECT.

Yesterday, I received yet another e-mail that contained a phrase like this one that hit my inbox:

Thank you for applying to the (redacted) position at (redacted).
Unfortunately, (redacted) has moved to the next step in their hiring process, and your application was not selected at this time.

For the record, I did the redacting.  But it shouldn’t matter in this case.  The wording for literally hundreds of jobs I’ve applied to on LinkedIn is exactly the same.  I assume a human being actually looked at my applications, but you know what they say when one assumes.

A less stubborn or determined (some would arguably claim desperate) person would have given up long ago, especially when you get these kind of considerate, empathic replies on a Sunday.  But I persist in my search and my quest to even be able to plead my case because, bluntly, none of these communiques bother to answer one simple question:

Why?

We all know no company is oblilgated to explain how and why they make decisions.  Even if artificial intelligence is making it.  Actually, especially if that’s the case.  I strongly suspect I know what at least one reason is, but am also acutely aware there are legal ramifications and exposures were it ever admitted.  Most actual human HR experts concur with my assessment, but they too, won’t go on the record.  In their esteemed belief, they seem to believe going about negotiations indirectly is the safest path.

Well, they haven’t met Rob Thun.  And I sure wish they would.

Thun is the chief content officer for DIRECTV, which despite overall erosion in the world of MVPDs is still the third largest distributor of networks and local television stations.  While currently at a 10-year subscriber low, per Statista, they still have 11.85 million households in their camp.  That’s approximately 10 percent of all TV households, and in plenty of individual markets they make up an even larger proportion of those stations’ deliveries.  Including the 52 where the 66 stations owned by the station group TEGNA are in.  Most of them are affiliated with Big 3 networks.

But these days those networks are owned by media conglomerates that have made no bones about being much more committed to their struggling streaming services than they are their traditional distribution partners.  Which for an MVPD means they are no longer the best (and, in many areas, the only) way to get network content.  Which more often than not is the highest-rated and most demanded content that local stations offer.  Which, in turn, provides the bait that hooks many subscribers in to watch other shows on those stations, especially their ubiquitous local news that serves as their primary source of revenue and profit.

Thun knows this better than most.  Like me, he spent his formative years as part of a negotiating team for FOX that aggressively challenged cable and satellite companies opportunistically, often targeting their negotiation deadlines to key dates such as big sporting events to increase the likelihood of consumer demand and outrage in order to secure the kinds of rate increases they believe their content was worthy of.  Station groups like TEGNA are still using that strategy and when they lose access to MVPDs, they put out the kind of public statements that attempt to put the blame on the bad, bad cable (or satellite) company.  NEXTTV.com’s Daniel Frankel reported the latest version of this public plea:

“Despite months of effort, DirecTV has refused to reach a fair, market-based agreement with Tegna,” the broadcaster said in a statement. “As a result, DirecTV and AT&T U-Verse customers will lose access to NFL and college football conference championship games, as well as some of the most popular national network programming and top-rated local news. We urge DirecTV to continue to negotiate with us until a deal is reached that restores our stations to their customers.”

Well, Thun is calling bullsh-t on that.  And via an insightful and detailed discussion with Frankel, he meticulously explained why.

Thun contends that station groups like Tegna are accepting spiraling reverse retransmission rates from conglomerates and passing the pain to pay TV operators.

“The broadcasters seem to not want to take the same aggressive tactics in negotiations with the networks themselves, and then they just pass the trash down the line to the pay TV providers. They assume we’re going to eat it and ultimately pass it on to our consumers. But we’ve hit the wall in terms of what prices our customers are willing to pay”.

Thun provided an extensive research deck, including what Frankel described as the “Doom Loop,” the virtuous cycle signaling the demise of the pay TV industry that was created and published by equity analyst Craig Moffett back in May and also used by Charter in some of its recent messaging.  Charter successfully used that strategy to cool Disney’s ambitious rate increase jets.  And as Frankel continued, station groups like TEGNA are victims both of largesse and their “partners”‘ double standards regarding content exclusivity:

DirecTV describes Tegna as a kind of serial blackout causer, involved in 275 impasses with operators since 2010 and demanding the highest retrans rates in the television industry while offering fewer programming enticements than ever to viewers. 

  • In terms of the remaining live football games, 21 Tegna stations are affiliated with NBC, which is also distributed via SVOD Peacock, and 16 Tegna stations are aligned with CBS, which is distributed via Paramount Plus. 
  • Even the Super Bowl itself will be available for linear viewing outside its 2024 broadcast home, CBS, with Paramount Global vowing to simulcast it on Nickelodeon

For events like that, it’s entirely possible that motivated fans will find alternative ways to watch.  And conglomerates who are working the streaming side of the aisle are ever hopeful that they might lure a few stray MVPD subscribers into their ecosystem.

Well, here’s a sobering reminder of how challenging navigating those waters can be.  This is my actual living room, with a smart TV interface on the TV at the bottom and DIRECTV’s GUI on the top (Please don’t criticize the decor or set-up, it wasn’t my choice).   As most pundits insits, do an eye test.  No question finding content choices on DIRECTV is simpler.   And plenty of studies back up my eye test, such as the one conducted by PYMENTS when the pandemic first drove demand for more and more TV:

Our research shows that the two key factors that dictate consumers’ interest in subscribing to such bundles are cost and convenience. We found that millennials and Generation X, high-income earners and consumers with existing subscription services are most likely to subscribe to service bundles and want even more capabilities in the future.

Our research also indicates that 51 percent of consumers rank saving money among the top three reasons for considering buying subscription bundles. Nearly one-third of consumers consider it to be the most important reason. Convenience is another factor that weighs heavily in consumers’ decisions regarding purchasing subscription bundles. Managing access to multiple accounts can be a daunting task for consumers. They must keep track of multiple account passwords, price changes, account upgrades and even changes in service agreements. Consumers consider this to be too much of a hassle, as 43 percent of consumers chose “the convenience of being able to access services through a single account and log in” as one of the most important factors that make subscription bundles valuable.”

But nowhere in those studies did anyone say they were willing to pony up to the tune that groups like TEGNA and Disney demanded.  And Thun is not shy about driving that point home.  And he’s thrown down the gauntlet, as THE ANKLER’s Sean McNulty recapped in this morning’s WAKEUP newsletter:

EITHER:

  • Agree to offer your channels à la carte (ie DIRECTV subs can decide whether they want them or not)
  • Or – allow us to set deals directly with the broadcast networks that you’re affiliated with (NBC, CBS, etc), so as to set one rate for each… vs. paying one rate for the CBS network owned by TEGNA, and the one owned by SINCLAIR, etc.

And Thun saved his strongest argument for last, one all the more significant given what’s coming up as the new year–a hotly contested Presidential election year–is about to dawn:

“We’re in a different ball game, because they [Tegna] are going to be in the thick of these elections, right? Two-thirds of their footprint has elections coming up through Super Tuesday across 16 states. I think the whole advertising market, especially for the broadcaster, is expecting the soft ad market to boomerang up based on what will likely be a very contentious election cycle. And it’s not going to bode well for them to be off of their largest distributors.”

Maybe CBS and NBC can find workarounds to get ballgames available to the masses these days.  Politicans seeking election, particularly on the state and local levels, can’t.  And stations like TEGNA’s are absolutely dependent upon that spending for their own financial health.

So the battle lines are drawn.  And Thun is determined to win–arguably, even more this week than he was last.    He’s a huge fan of the Georgia Bulldogs, and let’s just say the results of this past weekend didn’t leave him in the best of moods.  Sorry, TEGNA,  your timing may have been off.

I’m admittedly biased on this one, because I honestly am not quite ready to cut the cord and, frankly, I’m at my max for what I’m willing to pay for DIRECTV.  And I root for people like Thun who are straight shooters and use research.   And if this works with TEGNA, I’m quite confident it will work with others down the road.  Even the networks.  Because they apparently realize that there’s a value to bundling–though not necessarily at a top-tier price, as TECHRADAR’s Tom Power reported on the same day the TEGNA/DIRECTV impasse began:

According to the Wall Street Journal (WSJ), two of the world’s most underrated streamers have held talks about creating a cost-effective bundle to put a stop to Netflix‘s dominance of the streaming landscape.

People familiar with the discussions reportedly told the WSJ that Apple TV Plus and Paramount Plus aren’t just looking to end Netflix’s reign as the world’s best streaming service. Per the US outlet’s sources, the duo are also said to want to offer their services as a joint enterprise in a bid to save people money. Indeed, the two companies are believed to have had meaningful dialog about offering said bundle at a cheaper price than subscribing to both streamers separately – a deal that would surely pique the interest of customers operating on a budget.

Feel free to add that to your deck, Mr. Thun.  And best of luck.

Until next time…

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