Youtoo is looking to challenge Verizon FiOS’ decision to drop the channel effective Dec. 31, which the network anticipates could doom its future.
“That’s a huge problem for a small company like us,” says Youtoo chief executive Chris Wyatt. “It could potentially spell the end of our business.”
The network is taking a proactive stance, hiring a lobbying firm and attending meetings with congress members on Capitol Hill and Federal Communications Commission authorities. To garner further support, Youtoo is encouraging viewers to contact Verizon executives and voice their support in social media.
“Small independents like us never talk publicly about these issues,” added Wyatt. “The cable cartel is truly an oligopoly. As a programmer, if I speak out against one cable operator, everyone fears being dropped.”
Youtoo started out as ComStar Media in 2008, which was created by Wyatt and televangelist Rev. Robert A. Schuller in order to combine television and web programming. In 2009, the company added two family-oriented television networks: AmericanLife TV and FamilyNet. After rebranding the company as Youtoo TV, the channel evolved into an interactive television network, which includes social media elements that allow consumers to be shown on TV.
The channel is available in 177 television markets nationwide, with a potential audience of 14 million households. Currently, the network is valued at around $200 million, which could be substantially reduced if Verizon FiOS eliminates the channel from its lineup.
Youtoo is only beginning to earn revenue from the licensing of its interactive technology to major networks, broadcasters and brands, which means that the network is still earning the majority of its revenue on cable. If Verizon FiOS drops the network, tens of millions of revenue could potentially be lost.
Verizon insists that dropping Youtoo is simply a business decision: “In order to continue delivering the most current and relevant programming on FiOS TV, we sometimes need to make changes to our channel lineups. These changes help us to add new content that our customers have been asking for, and we’ll be announcing additions to the lineup soon,” Verizon spokesman Jarryd Gonzales announced in a prepared statement. “Verizon’s decision to drop Youtoo from the FiOS TV lineup is a business decision made due to low viewership and to help continue delivering the most current and relevant programming that our customers want.”
Because there seems to be no end to rate hikes from the major broadcast and cable networks, pay TV providers are looking to cut costs anywhere they can. And in this case, it’s the smaller, independent networks who will wind up feeling the pinch. They don’t have the leverage that larger networks have when it comes to convincing pay TV providers carry their lower rated channels, so they are usually the first ones to get dropped when push comes to shove.
According to Wyatt, large media companies will bundle low-rated channels with popular channels as a package to cable and satellite distributors, which forces them to carry the low rated channels just for the right to carry the popular channels. Since cable and satellite companies can’t cherry pick the channels they want from large broadcasters, they look to the other channels that are easiest to cut, even if the average per subscriber fees amount to no more than a few pennies per month.
Wyatt is trying to get Verizon to grant Youtoo a 60-day reprieve, so the network can come up with a plan to ensure its carriage with the pay TV provider. However, it seems that Verizon isn’t moved by his lobbying efforts thus far. “What we’ve asked Verizon to do is come back to the table. Give us 60 days,” he explained. “If it’s a ratings issue, which we weren’t informed of, give us a year to build the channel up.”
It’s a shame that smaller networks will be taking a hit in the latest round of cost cutting. The big issue here is leverage, and how much we’re willing to preserve competition and consumer choice. From the looks of it, perhaps Youtoo’s only hope is to be bought out by a major network, so it can be bundled in with the rest of their channels. Still, the point of pay TV is to have access to the smaller networks, giving consumers more entertainment options. Unfortunately, it seems that network stratification is becoming the norm rather than the exception—if we don’t develop the political will to break content cartels, then the extinction of independent networks will truly be a forgone conclusion.