TV Blackouts Will Only Get Worse

(Bloomberg Opinion) -- Whether you still use a coaxial cable to watch television or have converted to streaming, get used to channel blackouts and general confusion over which TV services carry your favorite programs.

Signal disruptions, or blackouts, spiked in the U.S. last year. They involved 29 TV stations, data from Kagan-S&P Global Market Intelligence show, and more than 200 markets were affected, according to the American Television Alliance, a group that lobbies for cable and satellite providers. And that’s just for broadcast signals. It doesn’t capture situations like the recent removal of HBO and Cinemax, two premium cable networks, from Dish Network Corp.’s lineup, including from its Sling TV streaming app. 

TV Blackouts Will Only Get Worse

For journalists covering the media industry, some of the most frequent and incensed emails from readers are from folks experiencing channel blackouts, such as customers of AT&T Inc.’s DirecTV service in Utah frustrated that their local NBC affiliate went dark in August. Increasingly, another reader gripe is the difficulty of comparing streaming subscriptions, especially for those consumers who are loyal to certain TV shows rather than the overarching network brands. 

The topic of re-transmission consent that has caused cable operators and broadcasters to lock horns is for another day. But this, along with the confusing new marketplace for streaming, is part of a broader issue in which the companies that dominate the production and distribution of TV entertainment are alienating viewers — viewers that they need now more than ever. 

On the consumer side, the good news is that old-school cable-TV packages that come with steep monthly bills, hundreds more channels than most people need and overly complex remote controls are becoming a thing of the past. But this new age of television still isn’t all that we’ve dreamed.

Now that just about every media giant has introduced their own version of Netflix Inc., they’re beginning to restrict their programming from rival services. It’s a trend that industry researcher The Diffusion Group has referred to as “media tribalism.” Furthermore, the number of blackouts give an idea of how tense industry negotiations must be at a time when more than 1.5 million U.S. video subscribers — and counting — have dropped service this year, and new lower-priced offerings are hardly profitable.

Walt Disney Co. is yanking its content from Netflix as it launches a streaming product containing only Disney’s library. It’s unclear which future shows and movies from Disney — the parent of Pixar, Marvel and “Star Wars” and the soon-to-be owner of 21st Century Fox Inc.’s cable and film assets — will be reserved for its streaming audience. For its part, AT&T is rejiggering its streaming strategy around HBO and the other brands it acquired in the Time Warner deal earlier this year. Megamergers like Disney-Fox and AT&T-Time Warner are enabling this new “tribalism,” which despite the rising number of TV products stunts any improvement in consumer choice.

Using Disney as an example, some superfans might think its niche app is enough. But say you ideally want access to the coming “Star Wars” series from Disney and the past “Star Wars” films (AT&T’s Turner owns those rights), plus the final season of HBO’s “Game of Thrones” and a few other networks not owned by either of those companies — that will likely require multiple subscriptions, the cost of which quickly adds up. Switching between different services is also still clunkier than simply changing channels. (It’s why I think at $11 a month more folks may settle for Netflix than companies like AT&T may be handicapping.)

As of now, there’s no indication that the industry will resolve this new frustration for consumers. The tiff between HBO and Dish — and others like it — are a sign of what’s to come as the media giants become more insular and their traditional means of making money dwindles. Blackouts are a symptom of unsustainable new industry dynamics. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Tara Lachapelle is a Bloomberg Opinion columnist covering deals, Berkshire Hathaway Inc., media and telecommunications. She previously wrote an M&A column for Bloomberg News.

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