Contract Fight Between Comcast, Estrella TV Highlights Another Reason Why The Mega-Merger Matters

There’s another TV contract dispute a-brewing. This one isn’t between a powerhouse cable network and their carrier, though. This time, it’s a fight between a small, Spanish-language broadcast network and everyone’s favorite cable company, Comcast. And while on the one hand the dispute looks to be a completely bog-standard fight about money, it’s also a key example of an often-overlooked aspect of Comcast’s growth and dominance.

The network in question is Estrella, a broadcast network (like NBC or Fox, as opposed to a cable network like AMC or ESPN) with affiliates in 40 cities. Estrella both owns and operates their stations in ten of those cities: Los Angeles, San Diego, Phoenix, Dallas, Houston, Salt Lake City, Denver, Chicago, New York, and Miami.

The dispute between Comcast and Estrella is over carriage for three of the broadcaster’s owned-and-operated stations: KPNZ in Salt Lake City, KZJL in Houston, and KETD in Denver. The current contract expires on February 19, and if Comcast and Estrella do not come to terms by that date, those three stations will be blacked out for cable viewers in those cities.

Estrella is painting the fight as the story of a scrappy minority-owned upstart being forced off the air by an uncaring corporate behemoth. Their campaign comes complete with the obligatory website urging fans and viewers to contact Comcast and demand their network stay on-air, along with a social media push.

Specifically, Estrella contends, Comcast wants them out of the way because they’re competition for Telemundo — an NBCUniversal network, and therefore, one owned by Comcast. “Comcast’s decision to force Estrella TV off the air in its Houston, Denver, and Salt Lake City systems comes as Comcast’s own Spanish-language network, Telemundo, has seen a growing percentage of its viewership change the channel in favor of Estrella TV,” the network’s press release reads.

“This has been a real-life David versus Goliath battle, with our minority-owned company fighting one of the largest companies in America, and armed with a simple message: let the people watch what they want to watch,” Estrella TV founder and chairman Jose Liberman said in a statement. “It is troubling to see Comcast act irresponsibly by putting its own self-serving business interests ahead of a small minority-owned company, and ahead of Comcast’s Hispanic customers.”

Comcast, of course, says that this dispute is nothing of the sort. Far from forcing Estrella off the air, they argue, the network is being greedy and pulling their own feed from viewers.

“We have been negotiating in good faith for months with Liberman Broadcasting to continue carrying its broadcast signals in these three markets, which represent only 20 percent of our total Estrella distribution,” Comcast said in a statement. “Most importantly, Comcast is not dropping Estrella – it is Estrella that has decided to pull its signal from Comcast customers. In fact, we’ve offered to continue to carry their stations under the existing arrangements, which are the same terms we have with other, comparable networks.”

Comcast also claims that because Estrella is such a niche network, they don’t really have a leg to stand on: “We do not believe Comcast’s customers should have to pay millions of dollars for Estrella’s broadcast programming that has very limited appeal. Contrary to Estrella’s assertions, these stations are not widely viewed among Latino audiences.”

As is typical in pretty much every carriage dispute, the truth no doubt lies somewhere in the middle.

It is true that in general, the most popular networks have the most clout to dictate their preferred terms. Millions upon millions of viewers care deeply about being able to watch ESPN, for example, which gives Disney enormous leverage with Comcast and other cable companies. Estrella is not in so fortunate a position.

Nationwide, Estrella is… not big potatoes. As Bloomberg points out, overall this season they lag behind Univision, Telemundo, and UniMas, coming in as the fourth highest-rated Spanish-language network.

That said, the network does have an audience, and that audience has been steadily growing since Estrella first launched in 2009. It’s concentrated in pockets: in Los Angeles, for example, Estrella programming performed extremely well against all other Spanish-language programming during last November’s sweeps, beating both the local Telemundo and UniMas stations combined in the coveted 18-34 primetime viewing demographic.

For all that we and others talk primarily about broadband, when it comes to Comcast and their pending merger with TWC, TV still matters. A lot. And not so much the big cable networks, who are starting to make transitions to other distribution outlets, but local programming.

In particular, the Hispanic/Latino population in the U.S., consuming Spanish-language programming from broadcast networks, is enormous. In 2013’s July sweeps, Univision won. Not just among Spanish-language programming, but among all broadcast networks, beating out ABC, NBC, CBS, and Fox. Spanish-language programming also routinely finishes in the top tier — or even at the top, period — in single-day prime-time ratings.

When antitrust experts talk about the kinds of harms Comcast can cause up and down the marketplace, this kind of squeeze is exactly the sort of scenario they mean.

It’s not just about being the only cable company in town for residents. It’s about being the only cable company in town for small programmers, for small networks, for small advertisers — none of which will get the chance ever to become big if fights with Comcast end up wiping them out early on.

Is Estrella trying to push Comcast into spending money they don’t want to? Absolutely. Are they unreasonable to be doing so? They might be; we can’t know because the deals of carriage contracts are always secret. But in the conflict between a little thing and a big thing, it’s the little thing that always has more to lose… and that can get squished a lot more easily.