Analyst: Why Al Jazeera Won't Get U.S. Distribution Soon

Qatar-based TV network Al Jazeera English has earned much well-deserved attention lately for its comprehensive, insider coverage of important world news, particularly the historic events underway in Egypt. So it’s not surprising that AJE execs have pledged to “renew their lobbying,” as the New York Times put it, of MVPDs for carriage of the channel. I get it. Strike while the news is hot. “I sincerely hope now is the turning point,” Al Anstey, the managing director of Al Jazeera English, told the NYT. The network presently has extremely limited distribution in the U.S. (the handful of areas are listed on the company’s website).

But with all due respect to Mr. Anstey, while AJE covers revolution in the Middle East, the upheaval in the U.S. TV business is going to make his goal very difficult to achieve.

“This is probably the worst time in history to try to get added to a cable channel lineup,” Derek Baine, SNL Kagan analyst, tells me. “The huge retrans battles are costing them a fortune, it’s going right into their margins.”

As operators face increased programming costs, they are getting their sheers out to prune underperforming networks from their lineups. “You’ll see a lot of channels dropped, not added,” Baine says.

What’s more, any changes that are made to cable operator lineups tend to be done rarely. They do it about once or twice a year, so as to limit consumer confusion. Changes also are often made in conjunction with rate hikes, so the operator can soften the blow of paying more with “but you get these five additional channels.”

AJE also is making their push amid competition from the likes of Oprah, tennis and the NBA. There are “tons of channels” that are not fully distributed, as Baine explains. Some are start-ups, others are rebrands, like OWN: The Oprah Winfrey Network cut from Discovery Health. Others are fighting for a better tier or channel position, like The Tennis Channel and NBA TV. “There’s just a huge amount of competition,” Baine says.

It may help AJE that it is designated as a non-commercial enterprise. So being a free option to carriers certainly doesn’t hurt at a time when so many MVPDs see themselves in a programming cost crisis.

At the same time, much of the same activity that’s generating buzz for the network — like sharing footage or having personnel appear on CNN or other news operations — may actually undercut its own case for demand. Viewers can get highlights of their feed on fully-distributed networks or catch their stream online for free. So why should an MVPD choose to give them a spot on the lineup over exclusive content telecast by OWN or The Tennis Channel or NBA TV?

One fairly compelling business reason that remains is an argument for a PR win. There’s a little window here amid major world news for a cable or satellite company to claim some do-gooding by saying, “We think this is so important, we’ve cleared the decks to make this happen.” Baine says the quickest way he would expect an operator to do that would be with a VOD channel, which can be hooked up overnight.

If a major cable operator does decide to add a linear AJE to its lineup, the process is far from flipping a switch. Once an operator makes a deal to approve a network, it achieves what’s known as a “hunting license,” Baine explains. Then if regional systems want the network, they make the add on a region-by-region basis. Satellite operators, which have a nationally-standardized channel lineup, would have an easier time of adding a channel more on the fly.

But as much heat as there appears to be around AJE at the moment, overall, the demand for mass distribution of an AJE linear channel is just not there, Baine says. “There’s pretty good coverage on CNN and your other major news channels of what is going on around the world, they have international networks they can pull from,” Baine says. “I think it’s just not in demand.”

UPDATE 2/4/11: Though it’s not the permanent, widespread cable and satellite distribution AJE execs are pursuing, the network’s content is getting some more exposure for its coverage of Egypt. For example, LINK TV, available on DirecTV and DISH, is devoting much of its feed to AJE. Also, a publicist for KCET’s SoCalConnected in the Los Angeles market emailed me to point out the show would dedicate an hour special on Egypt Feb. 4 featuring “continuing, live coverage from Al Jazeera English.”

Follow me on Twitter: @melissagrego