The Dish Network - Hearst Feud Is a Symptom Of A Bigger Problem

While many of you out there may not know of the issue between satellite provider Dish Network and Hearst television, the ongoing feud between the two should stand as an object lesson.

Back on March 3rd, Hearst blacked out Dish from carrying its local TV stations in 26 cities across the US. That certainly affected us here in New Hampshire as well in Maine, Vermont, and Massachusetts as the local ABC affiliate stations, all owned by Hearst, were removed from Dish.

The issue?

Huge increases in the retransmission fee rate that Hearst demanded from Dish.

What are these retransmission fees? They are what local over-the-air TV broadcasters charge cable TV and satellite systems to carry their signals. These same signals are free to anyone who can use an outdoor antenna to receive them, signals transmitted over the publicly owned airwaves.

It used to be that TV broadcasters loved being retransmitted by cable TV and satellite providers because it increased the coverage area of their stations without them having to spend a penny to build additional transmitters. a definite upside for them. A second upside for them was that they could charge higher advertising fees because now they had more viewers and ad rates are usually dependent upon viewership. So, without having to invest their own money they saw their viewership greatly increased which in turn made them more money.

Then Congress effed it all up.

By allowing the over-the-air TV stations to start charging retransmission fees, they opened the door to abuse by those TV stations. This put them in the same boat as the 'regular' cable content providers like USA, A&E, ESPN, and so on.

Dish has not been the only system operator who has been negatively affected by these fees. DirecTV had the same problem with Hearst back in January, but DirecTV knuckled under to Hearst after a few days. The cable MSOs aren't immune to this as they have felt the wrath of other TV stations, cable content providers, and their parent corporations who have pulled the same stunt.

Whether the broadcasters and other content providers understand that they're reaching a tipping point where cable/satellite subscribers will finally have enough and 'cut the cord' is unknown. I do know that more people have been doing just that as they are tired of paying increasing amounts for TV, and particularly for channels they never watch. That streaming services like Netflix, Hulu, SlingTV, and a host of others are becoming more popular isn't surprising to anyone who has been paying attention.

I know the missus and I are pretty close to pulling the plug on our satellite subscription as we find ourselves using it less often than we have, yet paying more for it every year. We use Netflix, Amazon, and Hulu for more of our TV viewing and for a fraction of the cost of our satellite bill.

I figure we'll reach our tipping point soon.