Drew Brees' new contract has a trickle-down effect. (Associated Press )
Unable to come to terms on a new distribution deal, it is very likely that Sinclair Broadcast Group, the largest owner of TV stations in the United States, will pull its signals from satellite broadcaster Dish Network on Wednesday.
That means Dish subscribers in the almost 50 markets where Sinclair owns stations will be without programming from Fox, ABC, CBS, NBC and the CW Network.
Both sides are already spinning the media and their subscribers. Dish says Sinclair wants a "massive price increase" and accuses the Baltimore-based broadcaster of being greedy and adds that "higher costs will translate into higher fees for customers."
Sinclair countered that "the prices it is requesting for its extremely popular stations are substantially lower than the amounts Dish is paying for other far less popular channels."
But while the two are taking shots at each other, in an interview, Sinclair Executive Vice President and General Counsel Barry Faber named a few other culprits -- Saints quarterback Drew Brees and the cast of ABC's hit comedy "Modern Family."
Noting that Brees recently signed a five-year, $100 million contract that will pay him $40 million just for the upcoming season and that key cast members of the ABC hit show "Modern Family" just got big pay raises, Faber said, "we buy our programming and our costs have gone up."
That observation often gets lost in these stories because the focus is always on the broadcaster and the distributor, but there are other factors at play. When CBS, Fox and NBC agree to pay more for the NFL, they then turn to their affiliates to kick in money to help pay for it. The networks not only take most of the commercial inventory from their affiliates but also now get a big chunk of the distribution fees that pay TV operators like Dish pay to get their signals.
The solution, says Faber, is for Dish and other distributors to stop paying so much for channels that don't get the ratings that Sinclair stations pull in. He thinks Dish's decision recently to drop AMC and its sister channels including WE and IFC is a step in the right direction.
"It seems to us there is a big difference between AMC and its ratings and our ratings," Faber said. While noting that AMC has some critically acclaimed shows ("Mad Men,""Breaking Bad"), Faber said if a broadcast station got the ratings AMC gets on its most popular shows, it would be grounds for cancellation on broadcast TV.
"We’re not asking for outrageous amounts of money," Faber said. "We're asking for rates that continue to be a bargain when you consider what they pay for other stuff."
Not helping the talks is Dish's new AutoHop commercial skipping device. Sinclair's Faber notes that if Dish wants to market a device that zaps commercials from its stations, it should expect the broadcaster to want some additional compensation.
Although the deadline for a new deal is still several hours away, neither side is optimistic. Viewers in Southern California will not be impacted by this spat. Most of Sinclair's stations are in the Midwest and Northeast.