A T-Mobile executive says the company is standing by how it sells streaming TV service to phone customers, even though programmers have cried foul over the company’s apparent decision to withhold certain details during negotiations for carriage earlier this year.
In a phone interview with The Desk Friday afternoon, the executive said the company believes its staggered pricing and programming tiers for its TVision streaming service complies with contractual agreements it forged with Discovery Networks, ViacomCBS and Comcast for the distribution of its linear pay TV channels.
Last month, T-Mobile officially relaunched TVision under two separate brand names: TVision Vibe, a $10 a month package with 30 general entertainment channels, and TVision Live, a more-expensive offering with three tiers of local broadcast, news and national sports networks.
Within a week, programmers were accusing T-Mobile of duping them with respect to how their channels would be distributed to customers, with Discovery’s chief executive being the loudest and most-prominent voice in the room.
Speaking to investors, Discovery CEO David Zaslav said he felt T-Mobile was violating its contractual agreement because its package of pay TV channels were relegated to the cheaper TVision Vibe package and weren’t available in the TVision Live bundle.
“We were very surprised with how T-Mobile decided that they were going to bundle our networks, particularly because we have a clear agreement where our networks are required to be carried on all their basic tiers [streaming] offerings,” Zaslav said. “We don’t believe they have a right to do what they’re doing right now.”
Last week, two network executives provided more information to The Desk about how those deals came about. They claim T-Mobile provided them insight into a cheaper, stripped-down streaming service that wouldn’t contain expensive sports or news channels.
Discovery’s executives initially expressed concern that the service would resemble Philo, a $20 a month Internet-based pay TV service that counts Discovery as an investor. But they ultimately agreed, thinking the service would be a good promotion for Philo and that customers might eventually switch away from T-Mobile if they wanted more channels and features.
Sources at NBC Universal and ViacomCBS also told The Desk they felt equally misled and duped by T-Mobile over the streaming service. A ViacomCBS source said the company would have conditioned carriage of its legacy Viacom cable channels on T-Mobile also carrying its CBS broadcast network and cable channels. Currently, T-Mobile only offers the older Viacom cable networks — including MTV, Comedy Central and VH1 — in its TVision Vibe package.
A source at T-Mobile said the company felt confident it was complying with its contractual agreements because they consider TVision Vibe and TVision Live to be separate streaming services. Customers have the option of choosing either TVision Vibe or TVision Live when they sign up for service, or they can add both to their bills. They compared the two services to Disney-owned Hulu and Disney Plus and AT&T’s DirecTV and AT&T TV.
On November 5, T-Mobile’s chief executive Mike Sievert echoed some of that sentiment, telling investors the company was “complying with all of our media contracts” and wanted to “be a great partner to media companies.”
But signs started to show that the criticism was starting to get to T-Mobile: One day after Sievert’s comments, the company withdrew Robert Gray, its executive for entertainment content, from the Stream TV Show digital media conference. Gray was scheduled to do an interview with industry journalist Jessica Toonkin, but the schedule was changed and his name scrubbed from a website associated with the conference.
On Friday, Variety entertainment columnist Todd Spangler suggested the company would eventually have to re-configure its streaming TV offerings if it wanted to placate unsatisfied programming executives who feel TVision runs afoul of their agreements. At least one executive who spoke with Spangler said the company had a window of “a few weeks to rectify the situation.”
Executives on both sides feel the situation could end up in court if T-Mobile doesn’t nudge — one of the primary reasons why it’s been difficult for reporters, including this one, to get executives who are willing to attach their names or positions to on-the-record quotes.
But as of Friday, at least one T-Mobile executive who has provided The Desk with reliable insight and information for prior stories said the company feel it’s in the right and isn’t about to change its programming packages anytime soon.
“We’re not changing shit,” the executive said in response to the Variety piece.
After a brief pause, they continued: “Well, let me rephrase. That Variety piece is largely speculative. We’re not being forced to change TVision, and we’re not changing TVision. That’s crazy.”
“If you look at the companies who have complained, it’s Discovery, it’s Viacom, it’s Comcast — all companies that have competing direct-to-consumer products or will soon,” the executive said. “We have similar agreements with Disney, with Warner, AMC, but you don’t hear them complaining.”
The executive said people within T-Mobile have reached out to their counterparts at Discovery, ViacomCBS and Comcast to try to “smooth things over” after their criticism, which includes “explaining a bit more about what we’re doing over here.”
“It’s not a losing situation for them if we offer low-price TV services that brings in an audience in the era of cord-cutting,” the executive argued. “They sell advertisements, and in the era of cord-cutting, if you’re a cable TV network, you want all the help you can get.”
But critics still think TVision’s long-term success might be shaky — not only if their disagreements with programmers continue, because inevitably they’ll have to renegotiate carriage agreements, but also because the low price point may be unsustainable as a business.
“It feels a little more of the same in terms of a company coming in and bringing in a service to market at an aggressively low price point that just doesn’t feel sustainable in the long term,” Andrew McCollum, the chief executive of budget TV service Philo, told the website Light Reading in a recent interview, adding that it wasn’t unusual for programmers to request their top-tier channels to be placed in basic subscription tiers.
“I don’t think I’m speaking out of school to say that every major programmer that you go and do a deal with will seek to require that at least their core networks are carried in the base package to all subscribers,” McCollum said.