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Verizon's 'Pay As You Go' Is a No-Go
By Swanni

Washington, D.C. (March 19, 2013) - Verizon is seeking to persuade programmers to pay them by how many viewers actually watch their channels, writes The Wall Street Journal.

Verizon, which has 4.7 million video subscribers, says it has begun talks for a new payment system with "mid-tier" and "smaller" programming companies, although company executive Terry Denison refused to name the companies.

In theory, if Verizon was able to strike a 'pay-for-actual-viewers' agreement with the programmers, it would enable the telco to pay less for programming acquisition and possibly pass the savings to their subscribers. The way it now works is that a TV provider such as Verizon basically pays what it and the programmer decide is fair value.

But Verizon and just about every other TV provider have complained that the cost of program acquisition is rising too rapidly and that something needs to change.

Several media outlets, including WSJ, seemed to get quite excited about the Verizon story yesterday, suggesting it could revolutionize the industry.

But, folks, it's not going to happen.

For starters, the media outlets, such as WSJ, fell for one of the oldest tricks in the book: Reporting that a company says it has "begun' talks with other companies, thereby suggesting there are serious negotiations ongoing. But the fact that one company says it's talking to other companies doesn't mean they are talking back -- and if they are talking -- it doesn't mean they are treating the negotiations seriously.

Sure, Verizon, and every other TV provider, would love to only pay for actual viewers. But the programmers would lose money in that scenario and therefore it's hard to believe they are doing anything but giving Mr. Denison a courtesy hearing.

Verizon, of course, benefits from pushing a story publicly that it's trying to hold down the cost of program packages; it makes the telco look good with its subscribers. But this likely a non-story, one more about posturing and public relations than any serious industry revolution.

To make it even less likely that Verizon can persuade the programmers to go along, the telco wants to use data from its own set-tops to establish how many people watch shows rather than a third-party source such as Nielsen. No way the programmers go for that.

If you want to see a serious story regarding the war between TV providers and programmers, check out:
TV Providers vs. Programmers: This Is a War!

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