DirecTV and the Pac12 Channel: should the conference look for a backup plan?

Russ Isabella-US PRESSWIRE - Presswire

The Pac12 continues to push people to complain to DirecTV about access to the conference channels; should they even bother? And have they backed themselves out of a direct-to-customer alternative?

The (not really all that exciting but apparently vexing) question of national distribution for the Pac12 channel(s) continues to roll along. Although DirecTV isn’t the only national distributor not to sign on, that’s the one that gets the most attention. According to John Cazano, DirecTV has received 80,000 emails about not carrying the Pac12 network, but does that really even matter to DirecTV? And, if it doesn’t, should the Pac12 even care?

Out of mild interest, I took a peek at subscriber numbers and churn for the major providers, and concluded that the answer to the first question is "probably not," and the answer to the second question is "probably not" but the Pac12 can’t say that, and that they may have backed themselves out of being able to simply go around the providers.

Firstly, there’s the question of how much DirecTV might be scared of people leaving for other providers. Let’s say for the sake of argument that every single one of those letter writers gets upset and leaves DirecTV for Dish Network: that would be bad but not out of line for a quarterly fluctuation, per the New York Times:

DirecTV is already the country’s largest provider of satellite television service, with nearly 20 million subscribers. It lost 52,000 net subscribers in the United States in the second quarter, after having gained 81,000 a quarter earlier.

That turnover is substantially lower than Dish Network:

The company lost 10,000 net subscribers, dropping 675,000 while gaining 665,000, in the three-month quarter that ended June 30

That’s against a subscriber pool of approximately 14 million.

So I guess that’s why DirecTV is inclined to try and wait out the Pac12 on this one: if the most motivated people switched, it would represent a bad quarter but not much more than that, even should they all leave at once... and since DirecTV seems to capture people who are interested in sports generally, it’s not clear that the departure of 80,000 people is even an imminent risk.

Similarly, Comcast has had much greater problems with departing subscribers than other cable companies, and guess who signed on as a national provider for the Pac 12 channel?

Comcast has some company in the land of cord-cutters.

One day after we reported Comcast's Q2 2012 earnings showed a drop in nearly 400,000 television subscribers in the past year, two more cable giants disclosed the same problem.

Time Warner Cable lost 169,000 residential video subscribers

DirecTV isn't doing well either.

AT&T U-Verse and FIOS aren’t quite rounding errors here, but they’re certainly not at the same level:

IHS Screen Digest said the 208,000 subscribers picked up by AT&T in the fourth quarter outnumbered Verizon's 194,000 gain and gave the company an edge of more than 103,000 subscribers for the full year.

AT&T U-verse currently has 3.79 million subscribers, about 400,000 fewer than Verizon's 4.17 million.

Surprise surprise, of these two, which one added Pac12? The one playing catch-up.

There is an exception to this idea that doom = adding the Pac12 channel, which is Time Warner Cable, which falls between Comcast and AT&T / FIOS in subscriber base, and is losing customers to all three, but seems to be marching to the beat of their own drummer, having had multi-year standoffs before now.

What I get out of the above is that all these companies have trouble, and that for the most part, the fastest ones to sign on with the Pac12 channel are the ones who are either trying to stem the bleeding or avoid falling further behind.

This suggests that perhaps the Pac12 might have been a tad optimistic to think that their one-model-and-one-price-fits-all approach would work on a national level. It certainly suggests that DirecTV might not be all that frightened of a letter writing campaign that represents a slightly worse level of quarterly churn than usual.

Now: the question of whether the Pac12 should care. Superficially, they have to appear to care, because they’ve drawn a line in the sand about their offering, and are still intent on having national distribution of the channel. Their approach to making sure that the regional coverage is complete in the conference footprint has worked well, so it’s understandable that they would be inclined to keep on as they started.

However, that means that the Pac12 national distribution Plan B doesn't extend beyond "encourage disgruntled customers to write letters" and "put nationally relevant games on the Pac12 channel," and there's nothing else to use as leverage or to offer to alumni - remember them? The source of the revenue?

I’ve been told by others that the Pac12 can’t start offering discounts or other deals to complete the national distribution goals, but that doesn’t seem right to me. When people say that wouldn't be fair to providers who have already signed on, the obvious response is that contracts can be modified (has anyone ever declined a discount after the fact?), and there’s no law-of-the-universe reason that DirecTV can’t be dealt with differently than the conference footprint providers except for the fact that the Pac12 doesn’t want to do that.

The point here not that the Pac12 is bad, the point is that the Pac12 can’t expect to make a case that DirecTV are being dicks just because the Pac12 doesn’t want to negotiate with them, and doesn't want to revisit any prior agreements. It also leaves the Pac12 looking like they’ve got no ideas when DirecTV proposes alternatives that would at least in principle put the channels in the homes of people who actually care. Furthermore, the "you’re being dicks and people won’t like you" method doesn’t appear to be a good choice when the motivated escapees are not that far off quarterly churn anyway.

So what else could the Pac12 do? Well, they could focus on being a direct content provider rather than feeding content only to cable and satellite companies. I was surprised from the beginning that the Pac12 didn’t make more of an effort to sell online access to their content. While cable subscriptions are down, high speed internet plan sales are on the rise (see the article above about Comcast’s customer losses, for example).

Presumably the Pac12 wanted to allow for online access via cable carriers, and therefore has backed themselves out of being able to sell their content directly. That may have been necessary locally, but it leaves alumni out of the conference footprint with one fewer alternative for getting access to the games - and alumni outside of the territorial US with virtually no (non-sketchy) alternative at all.

If the conference doesn’t want to bend to DirecTV’s will, one quick way to address access issues might be simply start selling access online, whether for single games or subscriptions, and go directly to their customers. I’m not saying this is a trivial level of effort, but if you’re already in for the cost of broadcasting non-revenue sports, why not make it as widely available as possible? It’s certainly a better way of getting content to the people who care than having them send emails. It would be more direct than implying that you want alumni to ditch companies without being able to say it for fear of souring negotiations. And it would be working with the trends of how people access content, rather than behind them. If we're supposed to be a conference of champions and on the leading edge, how about we start acting that way?

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