Why do we have to pay for locals with Dish?

[Hall]

Congress has created this problem by not allowing Dish bring in a distant network channel if the local network channel won't agree to a low fee to carry it. If WABC in NYC won't bargain in good faith, let Dish bring in the Syracuse ABC channel.

People don't want locals from another city. Watch what happens when Dish, Directv, or the cableco drops a local channel during a dispute. The majority of people are in an uproar, telling the provider to "just pay what they want" or "I'm switching to (insert the competitors here)".

Most estimates are that ~10% of viewers still use an antenna to receive TV stations. They are reliant on their satellite or cable provider to give them to them. If you're on cable, do any set-top boxes allow you to connect an OTA antenna ? I believe Directv's set-tops do, but they also only pass-through the locals for your area no matter what you can pick up on your antenna (I get Dayton and Cincinnati but since I'm in the Dayton market, they would block the Cincinnati channels from me). Besides, if one pays for TV, I'd guess 2-3% maximum also incorporate an antenna. For that last statement, before responding, read my signature....

 

[mike123abc]

If you look back at the history of Dish, they got their subs by offering locals. They were only a few million customers before locals and the growth rate was slow. Then Dish started to offer locals, the more markets they offered the faster they grew. They started to launch spot beam satellites to cover even more markets. Quite frankly it is a minority of Dish customers that do not want Dish to deliver their locals, yes probably a large majority of Dish customers could indeed put an antenna on their roof and get locals, but history showed they did not want to do that. If you do not want to pay for locals you will need to give up satellite & cable, neither one will give up the locals and the customers that providing locals brings. The locals know that, and use it to force payment for every subscriber in their area, like it or not you are going to get locals from Dish just like you are forced to get every other channel in the package.

 

[osu1991]

It comes down to choice and forcing inclusion of locals in base packages takes away a cost saving choice for some.

My opinion is most people jumped on sat delivered locals as dvrs became more popular and they had no way to record OTA other than a vcr. Some people were/are techonologically challenged too and changing inputs from tv tuner to video input was also a challenge.

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[bobvick]

I predict, within the next 10-15 years, OTA as we know it today will be a thing of the past. The broadcast networks and the broadcasters (Sinclair, Media General, Cox, Tribune, etc..) are getting more consolidated and greedy. They will find some way to sell their spectrum or use it for something other than FREE OTA. You will be forced to pay to receive local TV, just watch and see. I hope I am wrong.


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[Scherrman]

It comes down to choice and forcing inclusion of locals in base packages takes away a cost saving choice for some.

My opinion is most people jumped on sat delivered locals as dvrs became more popular and they had no way to record OTA other than a vcr. Some people were/are techonologically challenged too and changing inputs from tv tuner to video input was also a challenge.

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DVRs were not the reason, they may have had a little to do with it but that's not the main reason. We have been selling Dish since the start and when Dish added locals it was huge. There were lots of people who couldn't get all of there locals with OTA or some couldn't get them at all. Our CBS affiliate had the worst signal of all the channels and people would get Dish because they could have that channel in clear digital format. I'm trying to remember if the DVR was even available or that popular back then. All I know is that the DVR didn't have much to do with people signing up for Dish when they first got locals here.

 

[Rolling Joe]

People don't want locals from another city. Watch what happens when Dish, Directv, or the cableco drops a local channel during a dispute. The majority of people are in an uproar, telling the provider to "just pay what they want" or "I'm switching to (insert the competitors here)".

People are upset because the network programming from those channels is missing during a dispute. Most could care less about the local channels themselves. Get the federal government out of the local channel monopoly business and all of these disputes vanish overnight.

 

[mike123abc]

People are upset because the network programming from those channels is missing during a dispute. Most could care less about the local channels themselves. Get the federal government out of the local channel monopoly business and all of these disputes vanish overnight.

It is not a government monopoly. It is a system set up by the broadcasters. You could view it like McDonalds, they license each store for a certain area.

 

[sparc]

It has to be an infinitesimal percentage of subscribers who do not want the locals

if it was so small, Dish could allow us to opt out. My guess is that it isn't a small number and having everyone pay in generates Dish a lot of money and helps offset retransmission fees.

Ever since i've picked up Dish, i've been steadily dropping services to contain costs. Locals would be next on the list if allowed and I think there's many with the same logic.

It is what it is. We always have a way out. Nothing will change until Dish sees more cord cutters.

 

[Scherrman]

Well I don't see it happening anytime soon but you can always keep asking Dish if they'll make an exception for you.

 

[JM42]

if it was so small, Dish could allow us to opt out. My guess is that it isn't a small number and having everyone pay in generates Dish a lot of money and helps offset retransmission fees.

But if our understanding of the contracts is correct and Dish has to pay for all subscribers in the DMA, why let anyone opt out?

The only reason would be if there is big enough market where "$X off without locals" would make up for eating the loss of "locals" revenue with additional subscriber volume. If there was a viable market for such and offering, at least one of the players would be offering it.

Even without contract considerations, it's a marketing problem. If Dish offers a "discount" for no locals, then DirecTV/Cable/UVerse/etc will advertise "free locals" and blast Dish for "charging extra." That might cost more lost subs than losing their current OTA users.

 

[Scherrman]

But if our understanding of the contracts is correct and Dish has to pay for all subscribers in the DMA, why let anyone opt out?

The only reason would be if there is big enough market where "$X off without locals" would make up for eating the loss of "locals" revenue with additional subscriber volume. If there was a viable market for such and offering, at least one of the players would be offering it.

Even without contract considerations, it's a marketing problem. If Dish offers a "discount" for no locals, then DirecTV/Cable/UVerse/etc will advertise "free locals" and blast Dish for "charging extra." That might cost more lost subs than losing their current OTA users.

Very good point. The average customer has no idea what they are all paying for, all they care about is the best price. They hate seeing additional fees too. Being able to say that locals are included in the price is very helpful. We still have customers ask if locals are included. They have no idea that at one point the package was $5 cheaper without them.

 

[harshness]

Since I use my OTA antenna for viewing my locals, I certainly understand where you are coming from, however, if memory serves me, the cost of having or not having locals back then was $5.

While they charged $5 for LIL, not having them available only gets you a $3 credit.

 

[mitchflorida]

What a great way for Charlie Ergen to hammer the broadcast networks. "Either you keep the fee increases for your networks low or I will zero you all out and install free antennas on our customer locations. Then you get zilch, nada." A one time charge to install antenna and you don't have to pay $10 or more for the rest of your life. The only requirement I would need is that they connect it to the Hopper so I can record multiple streams. It should be seamless to the customer. Just the threat of installing the antennas would give CBS and NBC a heart attack as they wave goodbye to all that income from Dish.

And Dish could lower their rates about $10 a month, would be an added incentive for those who can get locals over the antenna.

 

[Scherrman]

What a great way for Charlie Ergen to hammer the broadcast networks. "Either you keep the fee increases for your networks low or I will zero you all out and install free antennas on our customer locations. Then you get zilch, nada." A one time charge to install antenna and you don't have to pay $10 or more for the rest of your life. The only requirement I would need is that they connect it to the Hopper so I can record multiple streams. It should be seamless to the customer. Just the threat of installing the antennas would give CBS and NBC a heart attack as they wave goodbye to all that income from Dish.

And Dish could lower their rates about $10 a month, would be an added incentive for those who can get locals over the antenna.

Dish would have to be pretty confident that this plan would work because it would be a major pain for Dish to implement this idea. I know they could do it but it would have some major costs involved. The worst part would be the fact that Dish couldn't guarantee what channels the customer would get with an antenna.

 

[sparc]

But if our understanding of the contracts is correct and Dish has to pay for all subscribers in the DMA, why let anyone opt out?

Contracts are very different from government regulation/requirements. If the population of people who want to opt out of locals was so small, it wouldn't need to be in the contract in the first place. It's a minimal gain for both parties in the contract.

The reality is that it benefits both Dish and the broadcasters to milk their entire subscriber base for a lot of money. There's no incentive for either to change until customers move on to alternatives.

Cable companies are already a joke. Some are already adding below the line broadcast network fees. Dish should be eating them alive for these games, but they aren't. Probably because Dish is leaving the option open to play this same game too.

 

[sam_gordon]

What a great way for Charlie Ergen to hammer the broadcast networks. "Either you keep the fee increases for your networks low or I will zero you all out and install free antennas on our customer locations. Then you get zilch, nada." A one time charge to install antenna and you don't have to pay $10 or more for the rest of your life. The only requirement I would need is that they connect it to the Hopper so I can record multiple streams. It should be seamless to the customer. Just the threat of installing the antennas would give CBS and NBC a heart attack as they wave goodbye to all that income from Dish.

And Dish could lower their rates about $10 a month, would be an added incentive for those who can get locals over the antenna.

I don't think you're looking at the big picture. You're looking at what would benefit YOU.

I am a firm believer the vast majority of Dish customers can receive acceptable OTA signals. Yes, there are some that require satellite delivery, but they're in the minority. So what keeps Dish from doing just what you suggest? Implementation. It's a fact right now that if you don't have satellite delivered locals, you don't get the guide information for your locals, whether your not Dish carries them. Do you get guide information for the .2 or .3 channels? That comes over satellite. Dish won't integrate PSIP.

Broadcasters saw Dish (and Direct) "making money" from offering locals and wanted a piece of the pie.

I do not believe OTA is going away soon (the Aereo decision took care of that). OTA is free (for the majority of viewers). Nothing is stopping you from getting OTA free. So do it. It's your choice to subscribe to Dish. Yes, you're paying for channels you don't need to. I bet there's other channels in your package you don't need/watch, but you're still paying for them.

 

[harshness]

I am a firm believer the vast majority of Dish customers can receive acceptable OTA signals.

I don't believe that this was true prior to the digital transition and I believe the number who have dependable OTA access is much less now than it was then.

 

[mitchflorida]

When locals were only costing Dish next to nothing and they charged us $5 a month, the amount was too small to be concerned with.

Now that we are talking $14 a month, it does become an issue because any network can blackmail Dish and turn off access to the Super Bowl and World Series, etc. The Networks now understand how much power they have and have announced that they are going to lower the boom on Dish and all the other service providers. As far as they are concerned, the sky is the limit. You either pay what we ask or we shut off all of your sports programming and popular tv shows. That is why things have changed.

 

[ChadT41]

Mitch, you keep saying $10,$14,$20. Where are your numbers for the cost of locals coming from? They don't add up at all, especially since all that is charged in the local package are the big 4. Any additional you get, would just be extras in the area. Also, keep in mind, if dish took that money away from say, Fox, then you'd likely see it's sports channels gone as well. No more fox sports, and abc would withdrawal Disney and espn on dish. So it doesn't make since to "screw the broadcasters". They have to much leverage.

 

[mitchflorida]

From Variety,

CBS had sought a fee of about $2 per subscriber per month for the retransmission consent rights to its CBS O&O stations covered under the deal, up from between 75 cents and $1 previously, according to analysts. Nobody was talking specifics on Monday, but it’s understood that the price tag stayed below $2 a sub at the outset while it will come to the two-buck benchmark by the end of deal term, which is said to run about five years.


So we are looking at $10 a month now, but this will keep on ratcheting up.