Bloomberg News

Weather Channel Returns With Less Reality After Blackout (1)

April 09, 2014

The Weather Channel agreed to cut back on reality television in order to return to DirecTV (DTV:US) after an almost three-month blackout.

The two sides, which battled over how much the largest U.S. satellite-TV company would pay to carry the channel, said yesterday in a statement that they reached a new agreement. While financial terms weren’t disclosed, the Weather Channel was set to return to DirecTV today. The companies apologized to viewers for the service disruption.

As part of the deal, the Weather Channel said it would trim its reality programming by half on weekdays, include more of the latest local weather and allow DirecTV customers to watch from mobile devices when they are away from home. While the pact illustrates the power of large distributors like DirecTV to extract some concessions from smaller programmers, it also shows the types of channels deemed “must-haves” by some viewers.

In February, DirecTV said it had lost a “few thousand” customers because of the absence of the Weather Channel from its lineup.

The Weather Channel is owned by Comcast Corp. (CMCSA:US)’s NBCUniversal, Bain Capital and Blackstone Group LP. (BX:US) DirecTV, based in El Segundo, California, fell 0.5 percent to $78.36 at the close. The shares have advanced 13 percent this year.

The standoff was the latest in a series of disputes over subscription fees. CBS Corp. (CBS:US) was blacked out for a month last year for Time Warner Cable Inc. (TWC:US) customers in New York, Dallas and Los Angeles. Cablevision Systems Corp. pulled Tribune Co.’s stations off the air in 2012.

Stormy Relations

DirecTV, with 20 million subscribers, is the biggest U.S. satellite-TV carrier. It had pushed for a reduction of more than 20 percent in the fees it pays the Weather Channel, which had asked for an increase of 1 cent a month per subscriber.

The Weather Channel, based in Atlanta, averaged 13 cents a month per subscriber in 2013 and in 2012, according to estimates from researcher SNL Kagan. It averaged 214,000 daily viewers in 2013, down from 264,000 in 2011, according to data provided by Nielsen.

By comparison, USA Network, the most-watched U.S. cable channel with an average prime-time audience of 2.43 million viewers, received 71 cents a month for each subscriber last year.

To help provide weather-related programming in the absence of the Weather Channel, DirecTV started a partnership with WeatherNation, an interactive service for local weather coverage.

The day before the new agreement with Weather Channel was announced, DirecTV announced a new deal to provide satellite-TV service for more than half a million hotel rooms for Hilton Worldwide Holdings Inc. Blackstone, which is an owner of the Weather Channel, holds the majority of Hilton’s shares.

To contact the reporters on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net; Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net Sarah Rabil, Rob Golum


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Companies Mentioned

  • DTV
    (DIRECTV)
    • $86.9 USD
    • -0.06
    • -0.07%
  • CMCSA
    (Comcast Corp)
    • $53.82 USD
    • -0.72
    • -1.34%
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