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DIRECTV vs. The Weather Channel: Who's Winning?
Washington, D.C. (January 19, 2014) - Could the tide be turning in favor of DIRECTV in its fee fight with The Weather Channel?
Deadline.com reported Friday that Moody's Investors Service says that The Weather Channel faces "serious operational credit ramifications" if it can not sign a new carriage deal with DIRECTV. The channel was removed from DIRECTV's lineup last Tuesday after the two companies failed to reach a new agreement.
Moody's says it believes The Weather Channel and DIRECTV will "eventually" come to terms to "avoid customer dissatisfaction and churn." But Deadline.com notes that the channel's debt increased dramatically in 2013 when it borrowed $600 million to pay a dividend to its three owners -- Blackstone Management, Bain Capital Partners and NBC Universal.
If The Weather Channel goes a significant amount of time without carriage fees from DIRECTV, which has more than 20 million subscribers, it would make it more difficult to pay back that debt.
That potential financial burden may be reflected in The Weather Channel's recent public comments about DIRECTV. On its Twitter page, the channel has been tweeting that the satcaster doesn't care about its customers' public safety.
"Take the pledge to switch to a TV provider that cares about its customers' safety," the channel tweeted on Wednesday.
From the start of the fee fight, The Weather Channel has maintained this is a public safety issue, even urging DIRECTV's customers to contact Congress to pressure DIRECTV to make a deal. But The Weather Channel has taken it a step further, suggesting DIRECTV is callous and uncaring. That could reveal a company becoming more desperate.
The debt issue -- and DIRECTV's decision to replace The Weather Channel with Weather Nation TV -- could force the weather network to lessen its demands to get a deal sooner than later.
But there's a danger in doing that as well. If The Weather Channel agrees to reduced carriage fees from DIRECTV, other TV providers will likely want the same in future carriage negotiations.
Assuming that DIRECTV does not suffer a serious subscriber defection due to The Weather Channel's absence -- and there's no evidence that it will -- it would seem the satcaster is now holding most of the cards.
This fact may not be lost on The Weather Channel. David Kenney, the channel's CEO, said last week that the channel blackout may last "a long, long time."
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