It isn’t a la carte but Verizon’s proposal to tie what it pays to carry TV channels to the number of viewers who actually watch is what big media companies might consider “disruptive”, according to the Wall Street Journal. Verizon’s FiOS TV is the nation’s sixth-largest pay-TV provider and has begun negotiations with some smaller companies about basing what Verizon pays on audience size. Under the established industry model, cable and satellite operators pay a monthly per-subscriber fee to carry channels based on the number of homes the channels are available. Verizon’s chief programming negotiator Terry Denson suggests that in many cases “We are paying for a customer who never goes to the channel”.
Verizon would like to continue providing a large number of channels but to pay each channel based solely on the number of subscribers who actually tune in for a minimum of five minutes. Viewership would be measured by Verizon’s set-top box data, not Nielsen ratings. This model might actually benefit some niche channels, Denson suggested. The proposal wouldn’t reduce FiOS subscribers’ bills, Denson said, but the shift might “stablize retail prices for consumers” unless more people watched smaller and midsize channels. Any increase would be tied to actual consumption. Negotiations are inching forward with the smaller providers, Denson said, and he plans to broach the subject with big media companies as carriage contract renewals come up. Verizon’s proposal comes at a time pay-TV executives are concerned that ever-escalating costs might cause customers to “cut the cord”.
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