News & Analysis
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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