SBJ/Dec. 20-26, 2010/This Week's Issue

DirecTV, Golf Channel far apart

DirecTV could drop Golf Channel at the end of the year, potentially taking away about 15 million subscribers from the Comcast-owned channel. Golf Channel’s affiliate deal with the satellite distributor expires Dec. 31, and sources say that the two sides still are far apart.

DirecTV pays about 25 cents a subscriber a month to carry Golf Channel on its Choice Xtra tier, sources say. Golf Channel is looking for a license fee increase and is trying to keep DirecTV from putting it on a less-distributed tier.

DirecTV and Golf Channel still are negotiating and could reach an agreement by the end of the year. Or they could agree to an extension that would leave Golf Channel on DirecTV without a new deal.


"Channels that aren't watched as much will
come down." 
Derek Chang, DirecTV

But Golf Channel’s timing could not be worse. This fall, DirecTV executives have been open about their plans to drop less popular channels and already have showed that they plan to take a hard line in dealing with them. DirecTV already dropped two Comcast-owned channels, Versus and G4, this year over rate increases and channel positioning. Comcast also owns Golf Channel, and if it gets dropped by DirecTV, the move could signal another sign of a larger dispute between the country’s two biggest distributors: DirecTV and Comcast.

“There will be other channels that are going to come down — channels that aren’t watched as much will come down,” said DirecTV’s Derek Chang during a discussion about dealing with increased programming costs at an industry conference in November. “If we’re going to do anything to try and mitigate the rise in costs on programming that we consider ‘must have,’ it’s got to come from somewhere. Otherwise, bills for customers will continue to go up.”

DirecTV has dropped Comcast-owned channels before. It kept Versus off its system for 6 1/2 months, from September 2009 to March 15, just before the NHL playoffs. That caused Versus to lose the country’s second biggest distributor for most of the NHL season. DirecTV dropped G4, a channel geared toward the video game culture, last month and that dispute is continuing. DirecTV still has not cut a deal for Comcast’s regional sports network in Portland.

Meanwhile, Comcast refuses to allow DirecTV access to its regional sports network in Philadelphia.

DirecTV has about 18 million subscribers, with about 15 million taking its Choice Xtra expanded basic package. Golf Channel is in about 83 million homes.

But Golf Channel’s viewership, particularly out of season, has been low. In November, the channel ranked 78th of 90 cable networks in total-day viewership, averaging 55,000 viewers on a 24-hour basis. Of sports channels, only Fox Soccer, MLB Network and NBA TV ranked lower.

Golf Channel ranked 80th out of 88 prime-time networks in November, averaging 83,000 viewers in prime time, ahead of Fox Soccer and MLB Network.

Losing DirecTV distribution would be a big blow for Golf Channel, especially since the network carries PGA Tour event programming and has an exclusive deal with the LPGA for its events. In addition, the network would suffer an even steeper drop in viewership by being in 15 million fewer homes.

The executive ranks at Golf Channel are changing with the NBC-Comcast merger. Page Thompson stepped down as Golf Channel’s president in September, leaving Earl Marshall to run the channel on an interim basis. Comcast does not plan to announce a permanent replacement until Comcast’s acquisition of NBC gains regulatory approval. Asked for a comment for this story, Golf Channel issued this statement: “We’re currently in active negotiations with DirecTV and hope to come to a mutually beneficial agreement soon that will allow Golf Channel to remain at the same level of service DirecTV subscribers have enjoyed for years.”

“Of course you care about ratings. You also care about things like passion and persistency,” Chang said at that November conference. “You’d like to deliver everything possible to all your customers. But the reality is that you’re running a business, and, like any business, you have resource allocations you have to make and you have to decide, ultimately, how you’re going to benefit your business on an overall basis.”

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