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Week In Review: The Networks Strike Back: Scripps Cuts Off Netflix; The FCC In The Time Of Trump

 

  1. The Networks Strike Back: Scripps Cuts Off Netflix

Bad news for insomniacs: Scripps is ending its deal with Netflix for a number of Food Network and HGTV shows, “Cutthroat Kitchen” and “House Hunters” among them.

It’s part of a growing trend for networks to take back their content from Netflix by not renewing the deals when they expire. Given the number of network deals struck in 2014 and 2015, we should be seeing more of this in the months to come.

 

Why It Matters

Networks were initially enthralled by the idea of Netflix: millions of dollars for shows that were still not ripe for syndication. The notion was that viewers would catch up on Netflix and then start watching the show live. That definitely happened for some shows (“The Walking Dead,” for instance), but what the networks are now thinking is that Netflix is stealing viewers from them on an overall basis, and that they can monetize their content more effectively by taking advantage of new outlets, such as the various virtual pay-TV services launched over the past year or so.

These services— AT&T’s soon-to-launch DirecTV Now, Dish Network’s Sling TV, Sony’s PlayStation Vue and Verizon’s G090 among them—are bound to benefit from this change of heart.

 

What You Need To Do About It

If you are a network, you’ll want to consider your own relationship with Netflix. Do you want the exposure and ease of having your shows on Netflix or do you want to take a chance with the new virtual platforms, which might prove to be better deals in the long run. To paraphrase Dirty Harry, do you feel lucky this year?

If you’re Netflix, you’ll need to step up your retention game. While thus far defections have been few and far between, you don’t want it to turn into a trend. Because while you are producing a lot more original content, it’s not enough to replace all those reruns, and let’s face it, one of the big reasons people like Netflix is the ability to watch countless hours of “Law and Order” and “House Hunters” without commercial breaks.

And if you’re one of the new virtual services? Well then, you already know the drill. See which Netflix/Amazon/Hulu deals are expiring and negotiate hard.

 

 

  1. The FCC In The Time Of Trump: What Can We Expect

One of the perks of being president is that in addition to a secret service detail, you get to pick who runs the FCC. So the assumption is that activist chairman Tom Wheeler does not have a whole lot more time left in that role.

 

Why It Matters

President-elect Trump has indicated that he is not in favor of the net neutrality rule the FCC has endorsed and the new chairman may roll that back.

This is, to many observers, much less horrible than it sounds. To begin with, there’s a school of thought that says the internet is vast and wide and the creation of dedicated fast lanes does not mean that there are corresponding slow lanes. The internet is uncluttered enough for everyone to go fast.

The other reason, which, to our eyes, is far more compelling, is that the Big Three streaming services (Amazon, Hulu and Netflix) are going to be relying on the open internet a whole lot less as they strike carriage deals with the various MVPDs, who will integrate them into their set top boxes. That will shut down any future competitors faster than dedicated fast lanes would: if the top three services are all on your set top box, you’re not going to spend a lot of time online seeking out numbers four through infinity.

 

What You Need To Do About It

Monitor what’s going on at the FCC—who takes over from Wheeler, where they stand on the various issues. If you’re an MVPD or a network, you’ll want to put your lobbyists on high alert so that they’re looking out for your interests before things come to a head.