DIRECTV (NASD:DTV), the largest satellite TV service provider in the U.S., has decided to stop broadcasting The Weather Channel on its network from yesterday. The two companies are facing dispute over the programming fee settlement.
The Weather Channel is jointly controlled by NBC universal, which is part of Comcast Corp. (NASD:CMCSA) and two private equity firms, namely, Blackstone Group LP (NYSE:BX) and Bain Capital Partners LLC.
DIRECTV currently has more than 20 million subscribers. According to industry researcher SNL Kagan, in 2012 and 2013, The Weather Channel received an average fee of 13 cents a month per subscriber. The content provider now seeks a fee hike of 1 cent a month per subscriber.
However, DIRECTV wants the monthly fee to be reduced by 20% as rating firm Nielsen stated that The Weather Channel has lost more than 19% of its audience since 2011.
One of the reasons behind The Weather Channel’s declining viewership is the growing popularity of its own smartphone and tablet applications with a substantial rise in demand for the devices.
Moreover, DIRECTV also mentioned that 40% of The Weather Channel's programming is now reality based and not weather forecasts. In 2011, DISH Network Corp. (NASD:DISH) also stopped transmitting The Weather Channel due to programming fee dispute.
Meanwhile, DIRECTV already replaced The Weather Channel with its own WeatherNation channel. The company also depends on several media groups whose channels are transmitted by the company for local weather forecast.
DIRECTV seems in no mood to negotiate with the Weather Channel. One reason may be that the TV networks for weather are getting intensely competitive. Privately-owned AccuWeather will launch its weather forecast channel in the third quarter of 2014. DIRECTV currently has a Zacks Rank #3 (Hold).