On Sunday, DirecTV marketers strategically seized the upper hand in their carriage dispute with far-right channel Newsmax, exploiting a rare moment of relative media quiet with a reminder that the operator remains open to putting Newsmax back on its programming grid so long as the network breaks from its “unreasonable” carriage fee demands.
In its statement responding to DirecTV's message on its “TV Promise” blog, Newsmax seemed to, at least to us, fall right into the trap ... by stating, at least on the surface, what seemed to be some fairly outrageous terms.
“Newsmax is seeking a very modest fee of about $1 a cable subscriber when we believe our market rate is $5, and it’s a key reason why hundreds of cable operators renewed with us last year,” Newsmax said in a statement.
Just how “modest” would $1 per month for each of DirecTV's 13 million customers be for a channel that averaged only around 0.1% of total U.S. TV viewing last year?
Not modest
Updated: A Newsmax rep reached out to Next TV after we originally filed this story and said the "$1 per" rate quoted in the company's Sunday statement was based on an "annual" index, not a monthly one. In nearly 20 years of covering of the cable TV industry, we'd never encountered a single instance in which this metric was broken down by year and not month.
Even monthly per-subscriber rates for pay TV services aren't easy to get. And the chart below isn't necessarily fresh — it was leaked by a virtual MVPD to analyst Dan Rayburn four years ago. But it still gives you some idea as to what the big channels cost relative to one another.
Adjusting for inflation, a $1-per-sub monthly rate would price Newsmax at just below AMC, A&E and NFL RedZone. And notably, a “market rate” of $5 per customer would make Newsmax more expensive than the cable “news” leader, Fox News Channel.
Taking Newsmax at its word, a carriage fee of $1 per year would break down to less than 10 cents a subscriber per month, which seems to match the channel's scale much better.
Newsmax was pulled off of DirecTV's services rollup — which includes DirecTV satellite, AT&T U-verse TV and DirecTV Stream — back on Jan. 24, after the two sides couldn't agree on carriage renewal terms.
DirecTV had previously carried Newsmax on terms exclusively based on advertising sales, and Newsmax is now demanding that the pay TV operator also pay it a guaranteed carriage fee.
The twist in this garden-variety carriage dispute: Newsmax, led by longtime conservative operative Christopher Ruddy, has corralled the backing of the newly installed House Republican majority and has effectively messaged the business dispute in the terms of ideological grievance — DirecTV, which at one time incubated Newsmax, is now trying to “silence” conservative voices, say lawmakers who have promised investigations and hearings.
DirecTV, which reportedly lost another 500,000 subscribers in the third quarter, can ill afford to bleed many more. Then again, by capitulating to Newsmax and paying artificially high subscriber fees for a polarizing channel that's mostly available gratis in the FAST ecosystem, DirecTV would have to drive up subscriber fees to the point at which it would lose plenty of customers anyway. ■
