Shrinking TV viewership is incentivizing cable operators to play hardball with TV networks (CHTR)

A carriage dispute caused dozens of TV stations from Tribune Broadcasting to go dark on Wednesday, affecting millions of Spectrum TV customers, Charter Communications cable TV brand, Deadline reports .

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The two parties were unable to agree on the amount Tribune should be paid for the rights to distribute its programming. Its unclear how long the dispute will last.

The Tribune-Spectrum channel blackouts mean nearly 6 million customers in 24 markets lost access to Tribune-owned local TV stations.Moreover, 14 million customers nationwide lost access to WGN America, a cable channel owned by Tribune. And somewhat troublingly for sports advertisers, the blackouts also mean viewers in some markets will lose access to NFL games on Fox affiliates.

The blackout highlights how declining TV ratings are intensifying carriage negotiations between cable operators and TV networks.

Shrinking TV viewership is incentivizing cable operators to play hardball with TV networks.Cable operators are standing their ground against demands for higher distribution fees from TV networks, as eyeballs flee to digital content over traditional TV, which is hurting margins for cable companies. The Tribune-Spectrum blackout is far from an isolated incident. Dish subscribers in November lost access to HBO after the two parties were unable to reach an agreement over carriage fees (HBO wanted more money), for example.
And this has contributed to a surging number of TV blackouts in recent years.There were 140 TV blackouts in 2018, up from 94 in 2014 and 8 in 2010, per Axios. Blackouts, along with other factors like price and convenience, play a role in driving cord-cutting.Consumers won't be happy if they can't view the content that makes them stick with pay-TV, such as certain news or sports broadcasts (rather than more niche networks). A nasty cycle could result: As blackouts exacerbate cord-cutting, viewership will suffer, resulting in even more contentious negotiations, causing even more blackouts, and, you guessed it, more cord-cutting.

It will only become more difficult for cable operators and TV networks to reach carriage agreements in the future.Cord-cutting will only worsen in the future as the availability of premium and cheaper digital alternatives increase (Disney+ is releasing in late 2019), meaning networks will continue to demand higher distribution fees (to supplement declining TV ad spend). This implies well continue to see the number of blackouts trend upward year-over-year, likely hurting pay-TVs attractiveness to consumers who begin to view it as less reliable.

Shrinking TV viewership is incentivizing cable operators to play hardball with TV networks (CHTR)

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