Letter from DC: Pay TV, Corporate Greed, and Sons of Anarchy's Kurt Sutter?

DirecTV, Fox Cable Carriage Dispute Contrary to Times

By , Columnist

Nearly 20 million DirecTV customers are set to lose the many channels of Fox Cable Networks -- including Nat Geo, FX, Speed, and Fox regional sports nets --  this Tuesday if the two multi-billion dollar behemoths are unable to reach a new carriage agreement.

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Fox is not new to this escapade of financial extortion, taking on nearly every cable and satellite provider in seeking rate increases when their contracts come up for renewal. And while carriage disputes over licensing fees are nothing new in the multichannel marketplace, this latest spat appears extraordinarily tone-deaf to the rising frustration with Wall Street and corporate greed. 

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This game of chicken also introduced an unprecedented tactic: the forceful and overt advocacy on behalf of its corporate benefactor by its talent, mainly Sons of Anarchy creator Kurt Sutter. Going well beyond any public comments, Sutter taped an appeal to his fans during Tuesday’s SOA, laying all the blame on DirecTV.

Sutter, the tattooed bad boy of television with obscenity-laced diction that would make a sailor blush, seems an unlikely candidate to inject himself into a corporate tiff, notwithstanding they pay him. 

He himself concedes: “I am well aware that I am working for the right-handed smoking man.  Like all corporate deals, the Goliaths are fighting for bigger chunks of the pie and in the process, the Davids who feed off the crumbs are getting screwed.”

Yet, Sutter insists his loyalty comes from the creative freedom afforded him at FX, specifically by its president John Landgraf.  “If it weren’t for that guy, I’d be selling star maps and handjobs in front of the Motherlode,” Sutter explained on his blog Sutter Ink.

That deliverance from tourist hell and lotion provides Sutter with his villain: the other guy, DirecTV, who is “f*ing over the customers that already pay a lot of money for their service.”  Problem is that cable and satellite customers pay a lot of money for their service largely because of the licensing fees networks, such as FX, charge for distribution of their content.

On one hand, customers are getting what they pay for; lots of diverse and high quality programming.  Where you once paid $30 a month for minimal offering of attractive content, you’re now paying at least $70 a month for a treasure trove that is stretching the capacity of your Tivo.

Yet, in the current social, economic and political climate, folks are going to have less patience for corporate brinkmanship -- with the inevitable end result of higher TV bills -- by two very profitable companies that are far from struggling to make ends meet.

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DirecTV’s FY2011 2Q revenues grew 13% to $6.6 billion with a 22% growth in operating profit to $1.23 billion.  Although the gains were largely attributed to its Latin America expansion, its domestic operations remain strong and profitable.

Fox Cable Networks, meanwhile, reported a 12% increase in its operating income of $631 million in its latest earning statement as it was credited with boosting the overall portfolio of its parent company, News Corp, and cushioning it financially from the News of the World fiasco. 

“I’m pleased that once again News Corp exhibited operational momentum in both [4Q FY11] and for the full year driven by significant increases at our market-leading Cable Network Programming and Television segments,” said News Corp. titan Rupert Murdoch. 

Where’d those increases come from?  “A stronger overall national advertising market and increased retransmission consent revenues,” like the ones it seeks to raise even further from DirecTV customers. (DirecTV claims Fox wants an across the board 40% increase; Fox calls that “not true.” He said, she said….)

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Bottom line for Kurt Sutter is he’s gonna get paid as long as he keeps delivering the ratings.  Yet you’d think he too would be a bit peeved that his Sons of Anarchy clubhouse (and its wannabes) would see their bills go up to pad the coffers of a bunch of suits.  Then again, the Men of Mayhem probably pirate their pay TV.

In essence, DirecTV and Fox Cable are having a pissing match over padding their bonuses on the backs of an increasingly struggling and unsure populace that is becoming more and more energized by the Occupy Wall Street phenomena that counts corporate greed as its primary mantra.

Memo to the Fox boys: This was sport during the good times of the '90s and fake good times of the '00s, but now it’s just plain arrogant.  (With Lindsay Gardner it was almost fun; but ya’ll ain’t no Lindsay Gardner.)

Memo to DirecTV dish-heads: Accept the Fox contract extension offer and work for a deal that gives Fox a bone and minimizes impact on your customers.  For Pete’s sake, News Corp used to own DirecTV.  There’s gotta be a business card of reasonableness somewhere in the Rolodex.

This keeps up, especially in this political climate of clamp down on industry for its disregard for its end users, and the FCC just might start sniffing around again on this.

While nothing regulatory will come out of it, it will accelerate the demise of cable and satellite as the predominant TV delivery platform and the bundling of programming that benefits content providers.  Go ahead: kill the golden goose for short-term gain and hasten your industry’s deterioration, just like the broadcast networks did.

And Kurt? What would Jax do? And is Clay really the guide for this?

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Marc Osgoode Smith has covered – and participated in - Washington DC policy circles for more than two decades as a journalist covering media and as an association and think tank executive. Smith now enjoys his role as a “cultural observer” of DC Politics and the people that engage in them.

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