Clock Ticks Down On Nexstar/AT&T Impasse

This week marks two months that Nexstar stations have been off DirecTV, making this not only the largest outage in retransmission history, but one of the longest.  To learn the exact number of hours, minutes and seconds, ask anyone who answers phones for DirecTV or a Nexstar station.

During those two months the battles for consumer and political support has been intense.  DirecTV continues to lose subs, even as Nexstar salespeople mourn the destruction of their overnight ratings. If this is about the political side, surely AT&T has made their point.

In addition to public relations, each side has deployed every internal weapon.  DirecTV benefits from the difficulty in unbundling services, plus consumer understanding that changing providers will not stop blackouts. Rebating a few dollars to the loudest complainers is easily worth the price.

Meanwhile Nexstar is playing an advertising makeup weight game to protect station revenue. Advertising agencies have come to understand blackouts. Most will accept additional commercials to make up for lost viewers. So far, actual advertising losses have probably been painful, but not devastating.

Of much more consequence are the currently suspended retransmission payments. Just a few months ago Nexstar reported higher first quarter revenue from retransmission payments than from advertising. DirecTV was an important part of that revenue. The loss of their payments over the past eight weeks is likely substantial. One wonders how long Nexstar will be willing to sustain such losses.

Up until now, there has been no major tipping point to force a settlement. That  changes Sept. 5, the day the regular NFL season kicks off on NBC.

If there is one thing that will cause consumers to change providers, it is the loss of NFL football. Should that happen, it will be a boon to the cable light OTT services. Once gone, a good portion of those former DirecTV subscribers will not return.

The stakes are just as high for Nexstar. The NFL is a very specific advertising buy.  Ad agencies will be less willing to accept makeup weight in other areas, so real dollars will be lost. Agencies will also assume a willingness to lose the NFL means Nexstar will not be back on DirecTV anytime soon. Rates will be adjusted accordingly.

Fast on the heels of the NFL is another date even more important to Nexstar’s southeastern CBS affiliates:  SEC football on CBS kicks off Sept. 14. In Birmingham, where Alabama Football is a religion second only to Baptist, the scheduled Alabama–South Carolina game would normally do between a 50 and 60 rating on the local Nexstar station, bigger than most Super Bowls. The Alabama games are so valuable that advertisers have to buy a package of commercials, including the station’s local sports programming, to appear in them. As with the NFL, real dollars will be lost.

Both parties have good reason to settle their dispute prior to Sept. 5, but what we don’t know is how the negotiations have progressed thus far. Are the parties close to a deal? Are there red lines neither is willing to cross?

If the Nexstar stations are still off DirecTV at 8:20 p.m. ET on Sept. 5, look next to the CBS and Fox games on Sunday, the 8^th. If a deal has not been reached by then, we move into unchartered territory with no end in sight. What will happen? We will know shortly.

This is one in a series of occasional columns from Hank Price, a media consultant, author and speaker. He is the author of Leading Local Television, a handbook for general managers. He spent 30 years managing TV stations for Hearst, CBS and Gannett, including WBBM Chicago and KARE Minneapolis. He also served as senior director of Northwestern University’s Media Management Center and is currently director of leadership development for the School of Journalism and New Media at Ole Miss.