Published on May 17th, 2018 | by Brad Gibson0
Sling TV boss: Local TV fees push consumers to “back from the dead” antennas
Increasingly higher fees charged by TV stations to re-broadcast their signals on pay TV services are leading U.S. consumers to cut their bills by buying cheap antennas to watch local channels as the price broadcasters charge continue to grow at an “aggressive” rate, an executive with the live streaming service Sling TV said Wednesday.
Speaking at the broadcast industry Pay TV trade show in Denver, Sling TV Executive Vice President Warren Schlichting explained that the nations largest live streaming TV service does not air local network stations because a cheaper alternative exists that save its customers money…the television antenna.
“A technology left for dead is making a huge comeback,” Schlichting said. “Rather than live TV streaming services being the ‘nail-in-the-coffin’ for antennas, we actually think they’re a boom because people want cable TV and broadcast together. But they’re only willing to pay so much.”
U.S. consumers bought 20 million digital antennas in 2017, more than double the rate in four years, Schlichting said. Of the five million TV streaming subscribers, 49 percent have an antenna, he said.
“We believe that the combination of pay-TV price increases and the declining value of bloated channel packages has motivated consumers to find other ways to watch TV,” he commented.
Schlichting said Wednesday “an unlikely technology is also gaining momentum and that is over-the-air antennas.”
Schlichting believes higher overall rates for television, including the price that is paid to watch local networks stations, is impacting consumer choice. Re-transmission fees – that’s the price cable, satellite, and streaming services pay the owners of local network affiliates for the right to broadcast their channel – have jumped 5,000 percent in 11 years, Schlichting explained. As a result, consumers are not only cord-cutting, but buying digital antennas to watch those local stations for free.
Calling the re-transmission fee hikes since 1992 as “aggressive”, he said pay-TV prices as a whole have increased 50 percent since 2007, more than double the rate of inflation.
“It’s unsustainable”, he said, for prices for TV programming to go up when viewership has declined 12 million homes in six years. “With every price increase, we push more subscribers away and things need to change.”
The higher re-transmission rates are among the reasons that lead Sling TV to not include local affiliate stations in their streaming service, unlike DirecTV Now, Fubo TV, Hulu with Live TV, YouTube TV, and PlayStation Vue who have been adding locals at a frenzied pace in the last year. At present, Hulu with Live TV has the most local stations of any streaming service with more thsn 530, something subscribers are paying for in their monthly bill.
Schlichting estimated on average the monthly fee rate for four network affiliates will go from around $12 a month now to $15 or even $18 a month in the next few years, a fee passed on to all subcribers.
“I think we thought we’re going to launch with local affiliates,” he said. “I don’t know which negotiations broke our back or if it was a long, slow thought process, but at some stage, we said ‘Why?. Why are we doing this?’ We have a way to save folks a lot of money.”
Schlichting said customers could save $12 a month by subscribing to services like Sling TV that have no local affiliates and use an antenna to view local network stations. Together with Sling’s AirTV Player, which integrates local channels from an antenna together with Netflix and Sling TV, consumers could save “$123 a year”, he said, not including the cost of the AirTV Player.
With a cheap, indoor antenna from online retailers like Amazon, consumers would be “in the black” in terms of spending in two months, he commented. “There’s a lot of opportunities to bring those two experiences – antenna and streaming – together. “We believe companies that provide this better experience for consumers at a lower price will win.”
The Sling TV app is available for download from the Apple TV App Store. The service has been available on Apple TV since June of 2016.