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As angry as consumers are about widespread TV channel blackouts, mad men are really fuming.
Ad execs say that escalating programming battles — which in the past rarely resulted in the loss of a channel — are hurting TV ratings, disrupting scheduled commercial time and jacking up rates.
The situation is bad enough that some Madison Avenue execs say it threatens to upend the entire pay-TV business model.
One big change is that local broadcast stations are pushing cable and satellite-TV companies to pay them to carry signals that used to be free, leading to so-called retransmission disputes.
Just last week, New York station WPIX went dark in more than 3 million Cablevision homes, leaving marketers scrambling to place their back-to-school ads elsewhere.
“If you’re in New York and you’re buying their news, it takes supply out of the market and pushes up prices,” said Marc Morse, a top TV buyer with RJ Palmer. “People have said this is unacceptable, they’ve got to get their act together.”
Added Gary Carr, chief TV buyer at TargetCast: “We’re losing audience for our advertisers. We’re guaranteed ratings, but they’re not running when we want.”
Cablevision’s blackout of WPIX, part of a broader battle with station owner Tribune Co., is one of scores of fights breaking out this year. The two remain far apart on a deal, according to one source close to talks.
So far this year, there’s been a 35 percent uptick in programming disputes, with channel blackouts hitting 73 markets around the country, according to the American TV Alliance, which is backed by cable and satellite-TV companies.
Advertisers are also suffering from Dish Network’s decision to dump AMC Networks, home to “Mad Men” and “Breaking Bad.” Satellite-TV provider Dish is in 14 million homes.
And just a few weeks ago, 20 million DirecTV customers lost access to Viacom channels, including MTV, Comedy Central and Nickelodeon, while the two argued over higher fees.
Ad execs expect things to get worse before they get better.
“If it happens more and more, [pay-TV providers] could be hurt,” said TargetCast’s Carr. “People are going to get TV from Hulu or video-on-demand or watch less TV.”
Industry execs on both the content and distribution side believe something’s got to give.
“I don’t think this problem is going away, it’s going to get more heated,” said Rino Scanzoni, who as GroupM’s chief investment officer oversees $25 billion in US ad spending. “The big concern I have is that this could lead to an a la carte menu, and advertisers lose if cable channels lose distribution.”
Scanzoni says Federal Communications Commission chief Julius Genachowski has tapped Madison Avenue for its views on the topic, although so far the regulator has been reluctant to weigh in.