The companies aren’t disclosing financial terms, but DirecTV appears to have won some major concessions, including an apology. The Weather Channel (to appear on channel 362) will cut its reality programming by half on weekdays. It also will return instant local weather and authorize DirecTV subscribers to stream its video programming to multiple devices inside and outside the home. And, in a really unusual twist, TWC chief David Kenny apologized to “DirecTV and their customers for the disruption of our service and for initiating a public campaign. Our viewers deserve better than a public dispute, and we pledge to reward their loyalty with exceptional programming and more weather focused news.” DirecTV Chief Content Officer Dan York crowed that while the dispute was “frustrating for many of our customers … their patience was ultimately rewarded with a better deal and a better product.”
DirecTV dropped TWC on January 14. The channel wanted a penny increase in the price DirecTV pays for it. (It averages 13 cents per subscriber per month across pay TV systems, according to SNL Kagan data.) But DirecTV said it wanted to cut its outlays, noting that TWC too often offers reality programs such as Deadliest Space Weather and Coast Guard Alaska instead of the latest local weather. Last week DirecTV strengthened its bargaining position by reaching a multi-year agreement to offer WeatherNation (on channel 361).
The fight could have created a big problem for TWC. Its debt burden sharply increased last year when it borrowed $600M to pay a dividend to its owners — NBCUniversal, Bain Capital Partners, and Blackstone Management Partners. Revenues from TV ad sales and distributor fees account for as much as 60% of TWC’s sales, Moody’s Investors Service estimates — and without DirecTV the top-line number could decline “in the mid-single to low-double-digit range.” That could trouble debt owners: TWC is “weakly positioned” in Moody’s rating of B1, which indicates its belief that its debt too risky for many investors.
Blackstone played a big role in the settlement, I’m told. It controls 76.4% of the voting shares at Hilton Worldwide, which announced a deal yesterday to offer DirecTV at a half million of its hotel rooms in the U.S. That agreement was conditioned on a resolution of the TWC’s battle with the satellite company.
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