Getting Content for Dish's OTT Service

According to a report by Alex Sherman and Edmund Lee for Bloomberg, Dish is planning to launch the first mainstream* Internet-delivered "cable TV" service sometime late this summer. The long-rumored over-the-top cable service may finally emerge after lots (Intel) and lots (Sony) and lots (Microsoft) and lots (Apple) and lots (Google) of rumors.

OTT probably won't involve an ethernet cable running straight into your set; it probably will use a Roku-like box

The report states that Comcast's NBCUniversal (USA, Syfy, CNBC, MSNBC, Bravo, E!, among others), A&E Networks (A&E, History, Lifetime, among others), Turner Broadcasting (TNT, TBS, CNN, Cartoon, TCM among others) and CBS (the CBS broadcast network, Showtime and the relatively small CBS Sports Network) have been approached about providing content for the service.

As followers of the industry know, Dish and Disney/ESPN entered into a ground-breaking deal a few months ago that would permit the distribution of several of the Mouse's marquee service on an OTT service. I posted about it here. While the deal was conceptually ground-breaking, however, no ground has been broken to date.

As I noted in the earlier post, it is not unusual in such an agreement that Disney would insist on a "critical mass" of other programmers also be included in any such efforts. (If there is nothing else in the package, then the package would effectively be an a la carte offering of Disney's networks.). The Bloomberg article confirm's my suspicion:  "The largest content providers have placed several conditions on Dish’s service before they’ll agree to deals, according to two people familiar with the matter. At least two of the four major broadcast networks -- ABC, CBS, Fox and NBC -- must be included in the service, and at least 10 of the highest-rated cable networks must also be part of the package."**

An older graphic with the NBCU brands at the time of the merger -- Daily Candy, Sleuth, Style and Versus are all no longer; Cloo, Esquire and NBC Sports Networks replaced the latter three

NBCU represents a particularly interesting potential content provider for the Dish OTT. As part of the Comcast acquisition of NBCU, the company is subject to a consent decree that, among other things, requires NBCU to sell similar programming to an online video provider that some of its competitors are selling and do so under comparable terms to which the competitor got. The recourse for the potential licensee (Dish, in this case) is that if it doesn't think it is getting a fair shake from NBCU, it can submit the dispute to the Department of Justice for arbitration.

What that means in this context is anyone's guess. If I were advocating for NBCU, I would hold that the restrictions on the Hopper than Dish agreed to with ABC would have to apply to NBC as well. My guess is that Dish is willing to go there. The agreement that Dish made to launch Disney Junior, Fusion (the English-language news service targeting Latinos), Longhorn Network (University of Texas sports service run by ESPN) and the upcoming ESPN Southeast Conference network appear to this observer as a substantial portion of the overall package that Disney received in conjunction with its grant of the OTT rights. I think it is less likely that Dish would be willing to launch and/or favorably retier virtually everything in the NBCU stable of networks to get the OTT rights; certainly Dish won't start the negotiation there.

For those unaware, Dish is a company known for using the legal process aggressively to try to gain an advantage at the bargaining table. If I were advocating for Dish, I might take the position that NBCU has to give up OTT rights to Dish only for the consideration that is explicitly tied to such rights (e.g., fees and packaging provisions for OTT customers) not consideration that Dish provided to Disney for its DBS customers.


* non-mainstream over-the-top Internet-delivered cable TV services have existed for a while including Dish's own DishWorld (mostly foreign-language international services) and Sky Angel (mostly religious-oriented services)

** The required inclusion of broadcast channels in the package could complicate things considerably -- the broadcast networks do not control all of their affiliates, they can only grant retransmission consent for their owned & operated stations (NY, LA, Chicago and a handful or two of other large markets) which would make the OTT service something only available in certain markets. Including some broadcast channels but not others (e.g., not the weaker stations which have "must carry" rights on DBS and cable) might lead to complaints to the FCC from them. Again, complications.