Independent TV network Fuse Media’s current pay-TV distribution dispute with AT&T appears to crystallize the issue. On Dec. 11, the media company filed a complaint with the Federal Communications Commission against AT&T, which owns traditional pay-TV providers DirecTV and AT&T U-Verse as well as streaming pay-TV service AT&T TV Now. In the complaint, Fuse alleges that the telecom giant is discriminating against the TV network owner and favoring AT&T-owned WarnerMedia’s cable TV networks, like TBS and Cartoon Network, that Fuse claims carry similar programming and appeal to similar audiences as Fuse’s network.

Fuse claims that its distribution negotiations with AT&T had been amicable before the latter company acquired WarnerMedia (née Time Warner). Fuse has tried to renew its distribution deal with AT&T since August and claims AT&T has been unresponsive at times and that its eventual counteroffer “was insultingly hollow,” according the complaint, which redacts many details, including specifics regarding Fuse’s offer and AT&T’s counteroffer.

“Fuse is the only remaining cable network that is Latino-owned, controlled and managed, and since January, the only English-language network serving Latinos carried by AT&T. If AT&T truly values minority voices, then their words must match their actions, especially at this time in our nation’s history. We are hopeful that AT&T will reverse course and negotiate in good faith moving forward,” said a Fuse spokesperson in an emailed statement.

“We treat all programmers fairly, including Fuse. They want the FCC to order us to carry programming our customers don’t want or value. We look forward to responding,” said an AT&T spokesperson in an emailed statement.

However, AT&T’s motivation may be less a matter of propping up its own TV networks and more a matter of cutting down its affiliate costs. “It’s hard to argue that it’s anything but an economic decision,” said Michael Hodel, director of telecommunications and media research at Morningstar.

With the acceleration in cord cutting and audiences tuning into streaming service, pay-TV providers are losing customers. To keep them, they need to retain the programming that people will pay to watch on traditional TV, like live national sporting events. That makes TV networks like Disney’s ESPN and WarnerMedia’s TNT especially valuable, allowing these network groups to demand higher affiliate fees to offset the pay-TV subscriber losses and to bundle other networks they own into these deals.

Because the pay-TV providers cannot afford to lose the likes of ESPN and TNT, they are put in position to pass on the additional fees to their customers in the form of price hikes and/or to reduce the affiliate fees paid to smaller TV networks.

“The bottom line is if …read more

Source:: Digiday