FS1 concedes subscriber fees to holdout distributors
August 15, 2013
The Sports Business Daily (subscription required) reports that Fox Sports 1 agreed to allow distributors to pay the same subscriber fee it had carrying Speed to carry the new FS1. This paved the way for the deals between FS1 and the holdout distributors.
The major holdouts: DirecTV, Dish Network and Time Warner came to agreement on Wednesday although nothing was reportedly signed. It comes out now that FS1 may have conceded the fee hike which would have seen the distributors receive a 258% fee raise from its current amount of 31 cents per subscriber per month. FS1 had proposed 80 cents per subscriber per month. According to Deadline.com, FS1 and the distributors are continuing to negotiate a more traditional deal.
It appears that the sides may have just delayed the inevitable as FS1 and the distributors will eventually have to discuss a fee increase once the Speed contracts are up with each individual distributor.
The moral here may be to wait until the last minute. If you are Comcast, Cox or one of the other distributors that came to terms with FS1 ahead of time, how are those rates compared to distributors that held out. Certainly, 21st Century Fox (the umbrella entity under which FS1 operates) wanted to ensure that its proclamation that FS1 would be available to 90 million households happened on the day of its actual launch. This may be due in part to the fact that it did not want to seem like it misrepresented the launch to investors. Moreover, a launch without 90 million households would seem like a failure for the company.
What the concession means is that subscribers of DTV, Dish and TWC may have to go through the whole process again when the contracts for Speed ends. Most, if not all would be in 2014. At that point, FS1 hopes that its ratings will reflect its value to the distributor, which in term would mean that distributors would have to pay the higher fee.