Youtoo CEO Chris Wyatt (Jay L. Clendenin / Los Angeles…)
Some small cable networks are getting lumps of coal in their Christmas stockings.
Earlier this week, Time Warner Cable said it was dropping the arts channel Ovation because of low ratings. Now Verizon Fios is telling its subscribers that it will stop distributing several channels, including Youtoo, Blackbelt TV, Blue Highway, and MAV TV.
There will likely be coal for other tiny channels as well. Verizon, Time Warner Cable and other distributors are making noise about needing to cut costs and are starting to scrutinize which channels are delivering value and which are just taking up space.
Beyond the ratings, there are myriad reasons that big pay-TV distributors are trying to cut smaller channels. The biggest is the rising cost of programming, particularly sports. Though Youtoo, Ovation and the other channels being dropped are less than 10 cents per-subscriber, per-month, every penny counts if ESPN costs more than $5 per-month, per-subscriber.
Also, there is a bandwidth issue. Pay-TV distributors are adding more high-definition versions of popular channels and that eats up channel capacity.
At the same time, smaller independent channels do not have the leverage to negotiate that channels owned by big media companies such as Viacom, News Corp., Time Warner and Walt Disney Co. have.
"We're at the bottom of the food chain," said Chris Wyatt, chief executive of Youtoo, a family channel with an interactive component that lets its viewers put their own videos on the channel. Investors in Youtoo include TV producer Mark Burnett. Youtoo is currently in 13 million homes but if it loses Verizon, it will be in just 10 million homes. Time Warner Cable is also considering dropping it.
Wyatt is scrambling around Capitol Hill this week, hoping to get lawmakers to stand up for little guys getting squeezed out by what he describes as the "cable cartel."
"Somebody has to stand up," he said. "As little guys, it is pretty hard for us to stay in the business."
Wyatt acknowledged that Youtoo has a small audience, but added that "Verizon never came and talked to us about ratings." He added that he was told that even if Youtoo was free, it couldn't stay on the system.
A Verizon spokeswoman said its move to drop Youtoo was "a business decision based on several factors, including low viewership and the need to continue delivering the most current and relevant programming that our customers want."
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