Currency

NCTC Head: Flexibility Key to AMC Agreement

Smaller operators looking at skinny bundles to curb cord cutting 1/05/2016 12:30:00 AM

Talks between AMC Networks and the National Cable Television Cooperative could have broken bad, leaving millions of subscribers without The Walking Dead and other popular shows.

But instead of being mad men, AMC executives decided to be flexible and creative to address the needs of small cable operators, according to Rich Fickle, CEO of the NCTC.

“It’s never perfect, but this one turned out good for us, and hopefully for AMC, too,” Fickle said. “We did some things in this deal we’ve never done in a deal that I was part of and solved some problems in a way I would do again in the future.”

AMC, which has become a leading destination for original programming since its last deal with the NCTC, was seeking and got a fee increase.

What it didn’t get was an even bigger fee increase based on the carrying of its networks and counting all of each cable operators’ subscribers. For operators carrying just AMC to be charged for AMC and its siblings, including BBC America, IFC and SundanceTV, whether or not it had the capacity to deliver them to subscribers, would have been too much for many to bear.

Fickle says that many NCTC members were poised to pull the plug on AMC at midnight New Year’s Eve rather than pay 200% to 400% more for the channel. And once that plug got pulled, they wouldn’t have plugged it back in.

Instead, led by CEO Josh Sapan, AMC got creative as the deadline approached. ”The AMC guys worked with us, they heard the members,” Fickle says.

Fickle couldn’t go into details, but instead of all operators being required to carry all networks to all subs, the new deal is more conditional. Based on the demographics and size of the market, plus the cable system’s capacity, the deal is designed to require that only the most appropriate of AMC’s networks be carried.

On top of that, "there’s an incentive for members to add channels but there’s not a requirement,” Fickle says. “I think that’s a better approach.”

The deal also gives operators more opportunity to create “skinny bundles” of programming to discourage cord cutting among consumers who think cable prices are too high and want more choice about which networks are in their bundles.

Fickle says that before the agreement was reached, a majority of NCTC members were heading toward dropping AMC. Now most won’t. Some cable companies, under intense cost pressures, will still drop AMC, he says, “But I don’t think it will be nearly as many as we thought it would.”

Now Fickle will move on to the next negotiation.

“We’ve got a couple of other large deals that may have similar attributes. I’m hoping we can use some of the lessons learned here to apply to those,” he says. “We’re focusing on trying to create more flexibility for consumers in terms of what channels they’re forced to receive. That’s big for us.”

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