Nexstar-DirecTV Carriage Battle Grinds On As Football Season Nears Kickoff
To the relief of many in the embattled pay-TV business, which faces its most uncertain fall season in decades along with existential angst due to cord-cutting, a reliable viewer draw is about to return. College football season kicks off on Saturday, with a slate of seven televised games starting with Notre Dame’s opener against Navy.
A shadow is falling across the gridiron, however. Millions of viewers interested in the Fighting Irish contest may need to tune in via streaming service Peacock instead of on linear NBC because of a protracted carriage battle. The impasse between Nexstar Media Group and DirecTV resulted in Nexstar local station signals going dark on July 1 for an estimated 10 million-plus out of DirecTV’s total footprint of 13 million across satellite, cable and streaming bundle packages.
Nexstar Media Group Stations Go Dark On DirecTV As Carriage Dispute Begins
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Soon after the college action starts, the almighty NFL begins its season on September 7, also on NBC. In the current environment, the NFL’s importance is likely to only grow this fall, building on a 2022-23 season during which it accounted for 92 of the 100 highest-rated broadcasts of the year.
While logic suggests a clear imperative for both parties to compromise and reach a settlement, indications are that the sides remain at odds. Proposals to restore service as a deal is finalized — a step sometimes taken in carriage fights — have failed to gain traction.
In a statement provided to Deadline, DirecTV said it “remains committed to negotiating a mutually beneficial agreement with Nexstar.” But the distributor said the local TV giant has indicated to shareholders that “a deal is on the horizon, while dragging their feet on negotiations and further harming the broadcaster, its investors, local stations, and viewers across the country.”
Counters Nexstar in its own statement, “Once again, DirecTV is misleading its subscribers, as they have done consistently throughout this impasse. In July, Nexstar offered an extension of four months to DirecTV while we continued to negotiate, which DirecTV flatly rejected.” The pay-TV operator, which was spun off by AT&T in 2021 into a new entity part-owned by private equity firm TPG, “is managed by a hedge fund, not a local broadcaster,” Nexstar contended. “They are interested is maximizing their profits, not serving their subscribers.”
The financial stakes are considerable. In a research note, Wall Street analyst Curry Baker with Guggenheim projected an $85 million hit to Nexstar’s distribution revenue. While he rates the company’s stock a “buy,” he said the DirecTV situation “complicates the outlook” for the company, noting that it faces carriage renewals representing 40% of its total subscriber base in the second half of 2023.
Nexstar, along with being the No. 1 owner of local TV stations in the U.S., also controls the CW and owns cable network NewsNation and digital outlets like The Hill. When the company reported second-quarter earnings earlier this month, execs acknowledged the weight of the situation but expressed confidence in a resolution. CEO Perry Sook pointed to Nexstar’s 2019 renewal with DirecTV, which was settled on August 29 of that year, ending a blackout that had begun on July 1. “We fully expect that we’ll be able to reach an agreement as we have historically with every other significant MVPD both past and future on commercial terms that are acceptable to both parties,” Sook said, noting the presence of Nexstar’s negotiatng team in LA, where DirecTV is based.
CFO Lee Ann Gliha said on the earnings call that the company’s guidance had not yet been adjusted to reflect a potential hit from the dispute. “I wouldn’t say a whole heck of a lot has changed other than now we are in a blackout,” she said on the earnings call when asked about the current outlook. “When we look at our guidance, we only take into consideration what we know at that point. And at that point I think we thought we would be able to come to some kind of agreement. So we’ll have to provide future updates on that as we go forward.”
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