The MSO Perspective on Negotiating—5 Qs With Cox's Payne

It’s probably past time to add programming disputes to that old adage about the only thing certain in life being death and taxes. Cox vp, content acquisition Kathy Payne chatted with us on her view from the MSO side of the table, including of the recent flap that saw Viacom nets dark on DirecTV for 9 days this summer.

It was interesting to see Cox side with a competitor during the DirecTV/Viacom feud. Do you see a trend where cable ops are joining forces when it comes to blackouts, retrans disputes?

While all MVPDs fiercely compete for video market share, we also all face the same and, in some ways, greater challenge of exponential increases in the cost of programming. The business can’t sustain these significant increases that are the main driver of rising cable and satellite TV service bills. The few customers we might pick up from a competitor in these disputes pales in comparison to the effect of being complicit in the game of programmers pitting distributors against one another, which helps programmers push through big rate increases. Cox has made a conscious, unilateral decision not to play that game. We also look at the increasing frequency of media focus on these disputes as good vehicles to help consumers understand why their TV service bills are rising so dramatically.

From an operator’s standpoint, have there been more blackouts in the last 2-3 years? What are the impacts of these blackouts on an MVPD?

There have been more blackouts, and they have been more contentious and more visible. These feuds have intensified as a result of the increasingly unbalanced multichannel video business model, which is having major effects on operators and, more importantly, consumers, and is creating wide disparities between what large and small distributors pay for programming. All of this gets passed through to our customers, and especially customers of the smaller companies bear a disproportionate and unfair cost.

Any solutions?

Unfortunately no one wins in these battles, especially our customers, whose awareness of these issues has increased but, at the end of the day, just want to watch their favorite shows at a reasonable cost. The decision to go dark should never be taken lightly. As programmers and operators work through the negotiation process, there must be a commitment to reach an agreement that ultimately does not unnecessarily burden consumers.

Is there a role for regulators and legislators?

We regularly share our concerns about increasing programming costs and the unbalanced model we operate under with our local public officials and in Washington. None of us believes government intervention is the way to go, as ultimately the market should determine prices and other private distribution practices. However, the constant disruption in customers’ services risks forcing the government to more closely examine the process. Programmers and distributors alike have to recognize that greater risk if the current trajectory of rising programming costs and practices like forced channel bundling imposed by programmers continues.

What’s the key in reaching an agreement?

Mutual commitment to the customer and a sense of fairness.

EDITOR’S NOTE: This story originally appeared in CableFAX Daily, our premium product. Go here to subscribe.