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The Real Reason Dish Network Dropped Fox News

Update (1:48 PM): This piece has been edited to reflect that Dish Network has announced it’s calling its new service “Sling TV”.

On the surface, the current spat between Dish Network and Fox looks like your typical pay TV carriage fight:

  1. Fox asked for more money for its Fox News and Fox Business.
  2. Dish balked and dropped both channels from its lineup on December 21.
  3. Both companies took their carriage fight public, setting up big angry web sites — here’s Fox’s, here’s Dish’s — attempting to portray each other as evil, heartless bastards that refuse to give you what you really want.

This sort of carriage fight usually ends with the networks finally agreeing to terms and your pay TV bill quietly going up another dollar or so six months later. There might be more to this particular carriage fight, however, than reports are suggesting.

You will recall that Dish had a similar spat with Turner Broadcasting last fall, dropping CNN and other Turner networks in October and coming close to dropping Turner flagships TBS and TNT before coming to a temporary agreement in late November.

Fast forward to January 2, when an eagle-eyed Reddit user posted this note about an upcoming DishWorld test and this screenshot of an email about it:

dishworldtest

For those of you unable to read that screenshot, here’s what it says:

As one of our most valued DishWorld customers, we want to give you an exclusive opportunity to try the next generation of DishWorld before anyone else!

Soon, we’ll be announcing a new English language entertainment service, which features the best of live TV, like ESPN, TNT, TBS, Disney Channel, Food Network and so much more.

This is a clearly a test of Sling TV, Dish’s upcoming over-the-top TV service which was formally announced today. Last March, Dish struck a deal with Disney to include ESPN and other Disney-owned channels on this service. It would appear that Turner is now on board with Sling TV as well, as TNT and TBS are prominently featured in this announcement.

Notice what Turner channel is not featured here — CNN.

So what might be really happening here? Here’s my conjecture:

Cord-cutting and password-sharing is clearly on the rise. Consider the huge amount of frustration vented on Twitter over WatchESPN going down during the Rose Bowl on New Year’s Day. Lots of people are out there sharing passwords to TV Everywhere services and watching on their smartphones, tablets, and set-top boxes like Roku and Apple TV. The networks, however, are not accusing anyone of “stealing cable”, in part because they want to see what the demand is for these sorts of online services.

According to comScore, nearly one in four Americans aged 18 to 34 don’t pay for cable or satellite TV. This is largely the group that’s watching TV on other devices. Dish wants to aim its Sling TV service at this market. They’re comfortable using Rokus and iPads, but not nearly as comfortable with a 200-channel cable bundle. Thus, Dish wants to position Sling TV as an alternative to traditional cable TV that’s leaner, with fewer channels but more quality.

Given the market it’s targeting, Dish might be aiming to launch Sling TV without any cable news channels.

Cable news has lost favor in recent years. Studies last year revealed that more young people trusted Jon Stewart and Steven Colbert to give them the news more than some cable news channels. With that in mind, Dish might want to make Sling TV the type of service for people who want sports and entertainment, but would prefer to get their news from other online sources. Having cable news channels on Sling TV would turn away that younger, more educated target viewers, because they wouldn’t want to pay for news sources they don’t trust.

However, Dish would want to add Fox’s other channels to its lineup — specifically, Fox Sports 1 and 2 and the FX channels. This is where Fox might be balking. Fox News is still the most-watched (and most expensive) channel in the cable news lineup, and Fox wants that channel to remain strong, even as cord-cutting grows. By dropping Fox News, Dish might be attempting to convince Fox that’s not a wise decision.

Will that tactic work? We’ll find out if and when we see Fox Sports 1 included on Sling TV. One thing’s for certain, though — if Dish manages to get Fox on board with Disney and Turner, they will be able to offer a service that appeals to a growing market: sports fans that are eager to dump the cable bundle and pay less for TV overall, but more for the channels they want. Given that this year’s Rose Bowl and Sugar Bowl were the most-watched programs in cable TV history, that market could be huge for Dish. ESPN appears ready to bank on this market. Will Fox join them?

4 Responses to The Real Reason Dish Network Dropped Fox News

  1. Interesting article. However, Fox news is in the top 5 channels watched of all channels. Not just news.

    • Which is certainly Fox’s main argument in this negotiation. The question is whether Dish is aiming Sling TV at a market that wants to pay for and/or watch Fox News, and I don’t think they are. They want to market to a younger audience that gets its news from sources other than TV, or from the likes of Jon Stewart (who’s on Hulu) and John Oliver (who’s on YouTube). I also think Dish wants to put Fox News in the separate “News” bundle, which is a $5/month add-on, and Fox is balking at that.

      In the meantime, my “no cable news channels” theory got shot to hell when it was revealed that CNN was part of the initial primary bundle. Maybe Fox is upset about that, since more people watch Fox News than CNN. I guess we’ll see how this all shakes out soon enough.


     

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