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Stormclouds as DirecTV drops Weather Channel

🕐 2 min read

Andy Fixmer (c) 2014, Bloomberg News. LOS ANGELES — DirecTV, the biggest U.S. satellite TV service, lost The Weather Channel from its lineup after failing to secure lower fees.

The channel owned by Comcast Corp.’s NBCUniversal and private equity firms Blackstone and Bain Capital was unavailable from 12:01 a.m. New York time, according to an e-mailed statement from Atlanta-based The Weather Channel. DirecTV is seeking a “substantial” reduction in monthly carriage fees, David Kenny, chairman and chief executive officer of The Weather Co., the channel’s parent, said in a phone interview before the statement was released.

Cable networks with smaller audiences such as The Weather Channel are bearing the brunt of pay-TV carriers’ efforts to limit cost increases, as the most-watched cable and broadcast networks demand more. The Weather Channel is even more vulnerable because viewers can get up-to-date information on smartphones or the Web, and watch local TV or a 24-hour cable- news channel when there is a storm in their area, said Christopher King, an analyst with Stifel Nicolaus & Co.

“Carriage fees are an ongoing area of contention,” King, who recommends DirecTV shares, wrote in an e-mail. “It’s difficult for me to say whether we need a channel dedicated to weather.”

DirecTV, with 20 million subscribers, is seeking to cut the fee it pays The Weather Channel by 20 percent, the Wall Street Journal reported Monday.

The channel had asked for a 1-cent increase in the monthly subscriber fee, Kenny said.

DirecTV is in talks for “an agreement to return the network to our line-up at the right value for our customers,” Dan York, chief content officer, at the El Segundo, California- based company, said in an e-mailed statement.

The Weather Channel averaged 13 cents a month per subscriber in 2013 and in 2012, according to estimates from researcher SNL Kagan. By comparison, USA Network, the most- watched U.S. cable channel with an average prime-time audience of 2.43 million viewers, received 71 cents a month for each subscriber last year.

“This is not a big increase and we haven’t had anyone else balk, Kenny said. ”This is an incredibly aggressive stance.”

The Weather Channel, available in 100 million U.S. homes, averaged 214,000 daily viewers in 2013, down from 264,000 in 2011, according to data provided by Nielsen. The audience surged to 709,000 during Hurricane Sandy and 326,000 during this month’s Polar Vortex that led to sub-freezing temperatures across the U.S.

NBCUniversal, which holds a 25 percent stake in The Weather Channel, is a passive investor and isn’t involved in the distribution talks, Kenny said.

DirecTV began carrying WeatherNation, a competitor, in the weeks before the contract’s expiration. AccuWeather Inc. announced plans Monday to start its own 24-hour weather channel in the third quarter.

— With assistance from Scott Moritz in New York.

 

Robert Francis
Robert is a Fort Worth native and longtime editor of the Fort Worth Business Press. He is a former president of the local Society of Professional Journalists and was a freelancer for a variety of newspapers, weeklies and magazines, including American Way, BrandWeek and InformatonWeek. A graduate of TCU, Robert has held a variety of writing and editing positions at publications such as the Grand Prairie Daily News and InfoWorld. He is also a musician and playwright.

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