Gannett to Dish Network: No Ads, No Programming!
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In addition to watching their favorite shows this weekend, market players may be watching developments between a feud between Dish Network (NASDAQ: DISH) and Gannett (NYSE: GCI). Gannett is threatening to pull programming from the satellite TV provider by the end of the weekend because of a controversial service Dish is offering that can cost Gannett dearly in revenues.
The threat is just the latest against Dish over a handy-dandy feature it offers for its DVR service in which viewers can record and watch certain shows commercial free. Gannett joins several other broadcasters and advertisers in complaining that the feature has the potential to result in them losing revenues.
The threat also highlights the broader implications for the broadcasting sector, which is being squeezed by a slew of other services, such as Netflix, TiVo and Hulu, which are luring their customers from them.
Late Thursday, Gannett alerted Dish Network of its plans to yank its stations from the satellite provider because of its ad-skipping service appropriately called “AutoHop.” It’s a part of Dish’s DVR service and allows subscribing customers to record the last eight days of prime-time programming from ABC, CBS, Fox, and NBC and watch shows without having to watch the commercials.
Gannett wouldn’t be the first company to try and put its foot down with Dish over the feature. Dallas-based Hoak Media this summer pulled its programming on Dish over it. Programming was restored shortly afterwards when a new distribution agreement was reached. Gannett has not filed a lawsuit against Dish over the controversial service, but Fox and NBC are among those who have. They immediately sued when the feature was unveiled in the spring. They began filing lawsuits almost as soon as the service became available, claiming it infringed on copyright laws. In response, Dish has also sought court action to allow it to continue to offer the service unencumbered.
In this battle, the losers are the broadcasters. Their lawsuits clearly are the result of their anxieties over losing revenues that come from commercials. Already, they must contend with consumers choosing to watch programming through other outlets. Consider the improvements Netflix, Amazon and Hulu are making to attract viewers. Those improvements include offering popular television shows that are also often ad free.
In Gannett’s case, losing advertising will further aggravate its revenue situation. For the second quarter, it reported that total operating revenues were down 2.1% to $1.31 billion compared to the same period in 2011. It did see an 11.4% increase in broadcasting revenues reflecting higher core and politically related advertising demand and significant growth in retransmission revenue.
If Dish survives the lawsuits and program pulling over “AutoHop,” it is definitely the winner. For a higher cost, it is offering something that I venture to say television lovers wouldn’t mind paying extra for – the ability to watch their favorite shows without being bombarded with commercials. Furthermore, the service helps Dish retain customers, as well as attract new ones.
Also, the satellite company should see an uptick in the revenues it receives from the higher fees subscribers pay for the DVR equipment.
If no agreement is reached between Dish and Gannett, viewers in several markets will lose certain programming at midnight on Sunday. They include Atlanta, Columbia, S.C., Grand Rapids, Mich., Knoxville, Tenn., Little Rock, Ark. and Jacksonville, Fla.
At the time of writing on Friday, Dish, nor Gannett’s, stock seemed to be negatively impacted by the impending Sunday deadline. They were trading around $32 and $19, respectively.
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