DirecTV faced a choice in January: Agree to start paying a monthly fee to Newsmax, a small right-wing channel that it had been distributing for free for seven years; or drop the channel and incur its wrath. DirecTV chose the latter—and Newsmax recast a simple business dispute as a shocking act of political censorship. Now Republican leaders like Donald Trump and Marjorie Taylor Greene are demanding Newsmax's restoration.
Disputes over these so-called "carriage fees" are fairly common. But in my two decades covering cable television, I have never seen anything that escalated like this. So I took a closer look at all the sides of the argument to assess what it says about the state of television, politics, and culture. The bottom line: DirecTV's decision makes total business sense, but Newsmax's emotional appeal trumps the other side's cold hard math—and it still may force DirecTV to cut a deal.
Here's how the math works. Cable, satellite, and streaming TV systems like YouTube TV sell bundles of channels – a model that was stupendously lucrative for the channel owners for decades but is now under extraordinary stress thanks to streaming powerhouses and other market forces. The bundle reflects, among other things, the cost of the channels wrapped up in it: High-rated channels like Fox News can earn several dollars per subscriber per month. Lower-rated channels settle for pennies, if that; some even pay the platforms for placement.
Generally speaking, the bigger your audience, the more you can charge; and conversely, the smaller your audience, the slimmer your odds of being able to command a fee. And Newsmax's audience is small: The number of people watching at any given time, according to Nielsen, is about 100,000. More than 50 other cable channels outrank Newsmax, including conservative powerhouse Fox News, but also minor players like VH1, Lifetime Movie Network and Sundance TV.
And Newsmax's big ask arrived at an awkward time for platforms like DirecTV. Over the years the monthly fees have risen so sharply that the entire bundle is at risk, as evidenced through year after year of reports about cord-cutting accelerating. I've seen it from both sides: When I was an anchor at CNN, a big chunk of my paycheck came from the monthly carriage fees charged by CNN's owner, but whenever I paid my Comcast bill, I winced and wondered if I should cancel cable.https :// in.pinterest.com/pin/**************/