Charter-Spectrum and NBCUniversal avoid blackout with new carriage agreement
Charter Communications and NBCUniversal quietly finalized a new carriage contract this week, ending a dispute that threatened to disrupt NBC programming for 16 million homes in the U.S.
The dispute over carriage fees came to a head in the waning days of 2016. Comcast-owned NBCUniversal used its considerable leverage by threatening to pull its channels on the eve of a high-profile NBC “Sunday Night Football” game featuring the Green Bay Packers and Detroit Lions to win concessions from Charter.
With progress in the talks, NBCUniversal abandoned its threatened blackout on Dec. 31.
The two companies declined to provide specifics of their new agreement, which was finalized Tuesday. The tug of war centered on the fee hikes that NBCUniversal had been demanding for its channels, people familiar with the negotiations said previously.
The agreement covers distribution of KNBC-TV (Channel 4) in Los Angeles and other NBC-owned TV stations, including Spanish-language Telemundo. NBC cable channels including Bravo, USA Network, Syfy, E!, CNBC, MSNBC and NBC Sports also are covered by the contract.
Charter is the largest pay-TV provider in Southern California. The Connecticut company acquired Time Warner Cable last spring and rebranded its cable TV, phone and broadband Internet service as Spectrum. In Los Angeles, there are more than 1.6 million homes with Spectrum service and another 100,000 Spectrum homes in San Diego County.
Contentious carriage negotiations have become more common in the industry. Media companies such as NBCUniversal have been shelling out more money for programming, particularly for sports. NBC, for example, pays the NFL more than $1 billion annually for rights to televise “Sunday Night Football” and a handful of Thursday night games and it has been looking to distributors to help cover its programming costs.
Pay-TV operators, meanwhile, face an increasingly uncertain environment as more consumers cut the cable cord in favor of lower-cost alternatives such as SlingTV, Netflix and Hulu.
Distributors do not want to risk alienating more customers by continuously raising their rates so they are struggling to hold the line on costs. They also have complained that media companies offer too many channels that few people watch.
As part of the new deal, Charter is dropping NBCUniversal’s Esquire channel. Carriage of Esquire was not a sticking point in negotiations, however. Charter becomes the third major distributor to eliminate Esquire, which was designed to be a channel for upscale men.
Dish Networks and DirecTV also no longer carry Esquire. NBCUniversal said it planned to keep Esquire alive as a digital brand.
Charter is under pressure to efficiently manage its operations, particularly after the company took on an additional $25 billion in debt to finance the 2016 acquisition of Time Warner Cable.
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