Extension keeps networks on GCI, talks continue over rate hikes

  • A contract extension will keep Fox, and the upcoming NFL playoffs, available through GCI as contract negotiations continue between the Anchorage-based cable provider and the owners of the network affiliates for Fox, ABC and CW in Alaska. According to GCI, the station owners are seeking a 300 percent rate increase to continue carrying the stations. (Photo/Rick Scuteri/AP)

Testy negotiations continue over cost increases between GCI and the owners of local network affiliates but a contract extension will keep the programming on at least through January.

“GCI has negotiated a contract extension so that the folks at Vision won’t turn off on ABC and CW tonight,” GCI said in an announcement to customers New Year’s Eve.

Without the contract extensions ABC and CW would have been removed from GCI service statewide on Jan. 1; the Fox contract was set to expire Jan. 15.

“Vision will also continue to let GCI provide Fox programming to our customers in January. The negotiations aren’t final and we’re not out of the woods yet but we are making good progress,” the release stated.

Fox programming includes the upcoming National Football League playoffs.

GCI offers 450 channels in Anchorage, and negotiates new contracts for each one of them, said spokesperson Heather Handyside.

Cost increases on contracts are usually between 5 percent and 20 percent, but Vision I and Vision II, the owners of the Fox, ABC and CW affiliates, requested a 300 percent hike on a new contract, according to GCI.

“That represents millions and millions of dollars,” Handyside said, though she declined to name the specific amount.

GCI is using social media to keep subscribers informed, Handyside said.

Matanuska Telephone Association, which also offers television cable packages, is having the same price issues in renegotiating its contract, according to a message to subscribers. MTA President Michael Burke said MTA stopped airing Fox on Jan. 1 after the same type of contract dispute over pricing occurred with MTA that GCI is describing. In price negotiations, MTA was counter-offered even larger prices each time they negotiated, he said.

"We're open to putting them back on at a reasonable price, but for now we've lost the ability to keep the channel and if they are willing to adjust thier ask," Burke said. 

One option is to view Fox over the Hulu platform, which streams television programs and movies online. That platform is available to all cable customers as well, he said.

“The broadcast TV market has been changing drastically over the last few years and some corporate broadcasters are demanding incredible rate increases,” MTA wrote in a message to viewers, without mentioning Fox directly.

GCI let the public know about its contract problems and also provided email and telephone contact information to Scott Centers, Vision’s station manager. GCI’s notice urged viewers concerned about the potential loss to contact him and voice their thoughts.

Centers said he didn’t want to talk about the on-going negotiations.

“I will not issue any comments at this time related to the negotiations with GCI and Vision Alaska,” he wrote in an email.

Handyside said given the sheer number of contracts negotiated to air all 450 stations, GCI is always negotiating price and one- to five-year contract lengths with distributors such as HBO, Disney, ESPN and many others.

“We do it successfully all the time,” Handyside said. “But every so often there is a programmer or broadcaster and we can’t meet their rates. It’s out of balance when compared with other stations that we pay. We do get into these very tense negotiations. And sometimes it takes awhile.”

Each year, it’s an industry standard for programming costs to hike up, Handyside said.

“The starting point is driven by sports content,” she said. “The thought is that these are expensive programs and cable companies should be willing to pay a premium for them.”

But in reality, price increases can only be absorbed so long by GCI before it must pass on those costs to its subscribers, she said. And those hooked to cable is a dwindling number in each annual revenue report submitted by GCI.

GCI lost 3,500 cable modem subscribers from third quarter 2016 to third quarter 2017, and 9,000 basic cable subscribers in the same period. The loss is attributed to Alaska’s recession and changing streaming habits.

Fairbanks and Juneau GCI customers just got Fox, ABC and CW back after two months. The lack of a contract in November caused GCI to lose programming for its customers in those areas, a spat that apparently upset viewers in Southeast Alaska when they lost access to Sunday football games, according to an article in the Petersburg Pilot.

But the January extension just agreed to on Dec. 31 between GCI and Vision restored the programming in Fairbanks and Southeast through January “and prevented the CW and ABC programming from going dark on New Year’s Eve,” Handyside said.

Over the next few weeks, GCI will continue to negotiate with Vision.

Another way to gain the content of ABC, Fox and CW is with the old-fashioned antenna system. All local stations are required under the Federal Communication Commission’s “must carry” rule. This made all local affiliate stations available to the public for free.

Naomi Klouda can be reached at naomi.klouda@alaskajournal.com.

01/03/2018 - 12:24pm