Weather's Kenny: Loss of DirecTV Subs Hurts, But Not 'Crippling' to TV Network

No Sunshine in Channel's Carriage Forecast with DBS Leader 2/11/2014 4:17 PM Eastern

The blackout of The Weather Channel on DirecTV is about to reach a month and there doesn’t appear to be any end in sight to the dispute over subscriber license fees.

The Weather Channel went dark late on Jan. 13, following the expiration of the extension of the parties' contract, which was originally set to conclude on Dec. 31, 2013. Since the disconnect, there has been silence from the affiliate camps in Atlanta and El Segundo, Calif.

“Their attitude always was kind of take it or leave it. As far as we’re concerned, there were never really good faith negotiations with DirecTV,” said David Kenny, CEO of The Weather Co., the parent of The Weather Channel, in an interview. “We haven’t had any conversations with them since.”

In the interim, The Weather Channel has seen its previous industry-leading subscriber count of 100 million-plus fall by 20 million, without a  presence on the nation’s second largest distributor. Kenny isn’t happy with the situation, but the DBS decrease doesn't mark the demise of The Weather Co., which is owned by a consortium made up of NBCUniversal and the private equity firms The Blackstone Group and Bain Capital.

“Fortunately, we have a diversified company,” he said pointing to business-to-business operations that supply airlines, TV stations and energy and other corporations with weather information and updates, plus its various online and mobile products. “Sure, it’s a hit on the TV business, but it’s not crippling. There are lots of networks that are vibrant with 80 million subscribers.”

Talks between the parties broke down over financial terms. Kenny said The Weather Channel was seeking a penny more per month. SNL Kagan estimates the network’s monthly subscriber fee at 13 cents. For its part, DirecTV, with Weather’s viewership down on its air, its customers objecting to some of the channel’s long-form fare, and the ability to get climactic content from other sources, is instead seeking a rate reduction.

“No one else is saying we’re less valuable,” said Kenny, noting that The Weather Channel inked a number of renewals during 2011, 2012 and 2013 at its rate card. He said those carriage deals cover “the vast majority” of Weather Channel’s subscriber base.

The network’s business is also governed by most-favored nation clauses and agreeing to a lower rate would undermine the pinnings of its affiliate model.

As to the DBS leader’s claims that The Weather Channel has lost audience, Kenny replied by saying “we grew our ratings in January, even though we were off DirecTV for half a month." According to Nielsen data, The Weather Channel registered a 4% gain to 236,000 viewers on average and an 8% increase among persons 25 to 54.

He also said that DirecTV was “using data points” to make its Nielsen case. “There wasn’t any hurricane like Sandy during 2013,” he said, before citing NOAA (National Oceanic and Atmospheric Administration) data indicating that people are five times more likely to turn to TV, rather than digital devices, during a disaster like Sandy.

Kenny said the company doesn’t have access to DirecTV’s records and since its upcoming financial report will cover the fourth quarter and not the period of disconnect, it will take quite a while before there is any overall reportage on churn, which he acknowledges incorporates many factors and occurs on a month-to- month basis.

Anecdotally, though, Kenny believes the drop of The Weather Channel is having an impact on DirecTV’s business. He pointed out that the satellite provider’s phone service instructs callers asking about The Weather Channel to hit a button over the issue, and that CEO Mike White responded in a letter to DirecTV customers, following a missive the network ran in newspaper ads challenging the provider’s cancellation rates and policies.

He also notes that Comcast, Dish Network and Cablevision customer acquisition ads are positioned on “They’re all making offers, so there must be some fertile ground,” said Kenny.

As of the afternoon of Feb. 11, the tally indicated that 6.6 million people visited the site; more than 819,000 complained to DirecTV; more than 210 million social media impressions have been made; and 287,000 visitors pledged to switch from the DBS provider over the drop.

“We have had a lot of positive feedback from our viewers and fans. They have let us know how much they value The Weather Channel, and they’ve made their voices heard to DirecTV, Congress and local city councils,” said Kenny. “There has been a lot of outreach by our viewers.”

On Tuesday, The Weather Channel added to its “storm DirecTV” efforts with a commercial spoofing the DBS provider's ongoing “Get Rid of Cable” campaign. Entitled "Aren't You Glad You Don't Have DirecTV," the spot, developed in-house and produced by State Line Films, conveys a subscriber's frustration -- bat in hand against the satellite dish -- over the service blackout

Kenny said the website, newspaper and radio ads, and spots on its air have made people aware of DirecTV dropping the channel and its cancellation policies.

“While we recognize it’s hard and expensive to switch providers, we also believe that some of what The Weather Channel is doing is having or will have an effect on customers who might be thinking of switching to DirecTV from another satellite, cable or telco provider,” he said.

Kenny downplayed the upgrade of The WeatherNation -- the service that has replaced his network on DirecTV’s lineup -- through which viewers can press the red button on their remote to access instant local weather conditions and outlooks. Later this week, short term and extended weather forecasts by zip code are scheduled to be integrated into the live WeatherNation broadcast and air every 10 minutes.

“They’ve restored applications that we’ve made available for years, ” he said.

Added network spokeswoman Shirley Powell: “For over 30 years, The Weather Channel has invested millions of dollars in great local weather coverage. These investments include precise local forecasts, live field coverage with trusted experts, Local on the 8′s, and most recently, a 24/7 local all the time scroll. We are not surprised that DirecTV needs to expend substantial additional resources on local, although the best solution would be that they simply return The Weather Channel to their lineup.”

But Kenny doesn’t seem to think that is likely to occur any time soon. Asked if he anticipates reaching out to set a meeting, that also doesn't appear to be on his immediate agenda.

“I would like nothing more than to get back to talking," he said. "I’m hopeful we can all get together soon and talk about the right things for audience -- to restore the Weather Channel to their dial.”

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