What’s this all about?
On Monday around 5 p.m., Verizon pulled Univision from its Fios lineup of TV channels.
Carriage disputes like this are relatively common, aren’t they?
Yes, they are. For instance, Charter and Viacom are arguing right now (see “Charter, Viacom fight means cable viewers at risk of losing shows like ‘SpongeBob’,” per USA Today); Charter Spectrum subscribers could lose Viacom networks including Nickelodeon, MTV and Comedy Central—but as of Monday both parties agreed to a temporary extension of their contract renewal deadline.
The difference here is that Hispanic-market-focused Univision claims the blackout came suddenly, “entirely without warning” to customers. Univision was clearly counting on one of the usual elements of such disputes—drawn-out negotiations.
Fios, which stands for Fiber Optic Service and can also include Verizon broadband and phone service, has about five million subscribers for its TV package, primarily concentrated on the east coast, including New York City, Boston, Philadelphia and Baltimore.
What kind of money is at stake here?
Univision has had a so-called retransmission deal with Fios since 2009. Though neither Verizon nor Univision have disclosed what sort of fees Univision collects from Fios, Verizon released a statement saying that,
Unfortunately Univision is proposing an increase of more than double what they charge for access to their channels today. In addition to the unfortunate timing of this excessive price increase, we believe the appeal for Univision’s programming is waning given their reported declining viewership. We’ve provided Univision a reasonable offer to continue providing our customers access to their channels. Unfortunately they rejected that offer and as a result we no longer have rights to bring them those channels.
The New York Post reported last year that Univision expected to take in $494 million in carriage fees from pay-TV providers in 2016, citing S&P Global data.
For its part, Univision is questioning the timing of the blackout, suggesting in a statement that its Hispanic viewers are especially reliant on its news programming right now:
Verizon chose to take this unprecedented action despite Univision’s offer of an extension of the current agreement. In light of recent natural disasters and current events impacting the Hispanic community, we are surprised and deeply concerned that Verizon would remove us from its systems—and without warning to its customers.
So what happens next?
Specifically in regard to Fios and Univision, we can expect things to get ugly, and possibly litigious, in the short-term. In February, New York Superior Court Justice Saliann Scarpulla intervened in a dispute between Univision and Charter, issuing a temporary restaining following a 36-hour blackout.
In general, these kind of battles will continue because broadcast and cable networks are deeply dependent on carriage fees while pay-TV service providers feel they’re paying more than enough already—and they have negotiating leverage as cord-cutting consumers decide that maybe they don’t need a traditional line-up of TV channels anymore.
How many Fios customers might cancel the service if they can’t watch Univision on it anymore?
Verizon doesn’t publicly break out the demographics of its Fios subscribers, but it surely has internal estimates of just how important Univision is to its customers. And right now its executives have to be staring at spreadsheets, weighing the cost of cancelled subscriptions against the potential savings of not having to pay Univision carriage fees anymore.
Another less tangible factor in Verizon’s calculations: Just how willing is it to piss off Hispanic consumers? Because Univision viewers are already taking to social media—and they’re definitely not taking Verizon’s side.
Verizon just took Univision our cable subscription off due to a contract dispute and my family is now in crisis send help
— Gio (@giorgiocarraway) October 16, 2017
Univision and Telemundo are cancelled on my cable and my grandma is livid, she’s on the phone with Verizon walllleennn
— skinhead (@_complexj) October 17, 2017
Verizon just cut off Univision cuz of a contract dispute and my Abuela is heated
— Zac Muniz (@zacmuniz) October 16, 2017
My mom now that Verizon no longer has Univision pic.twitter.com/7L0pvktLUK
— Raquel F. (@kelly_kellss) October 16, 2017