A conversation with a top Altitude executive, about that cable dispute thing

I got the chance to spend nearly an hour Friday in the office of Altitude executive vice president and general manager Kenny Miller, and – you got it! – the main topic of conversation was the standoff between his company and the “Big Three” local cable companies – DISH, DirecTV and Comcast – which has resulted in a virtual blackout of the channel in most of Colorado.

With the October 3 season opener less than a week away, the question is: will anybody in the metro Denver area be able to see the game? In a wide-ranging conversation, one of the things I asked Miller was: would you put a percentage chance on the dispute being resolved by opening night?

“I wouldn’t, because the conversations change every day,” Miller told Colorado Hockey Now. “The landscapes and the possibilities change every day. I could sit here and give you a percentage, and by the time you actually get this (story, podcast) on, maybe all of a sudden we have a carriage deal.”

Miller wouldn’t divulge specifics, but it has been acknowledged by others at Altitude that the channel is exploring other options that might include Amazon or YouTube, or maybe another streaming network. If nothing is solved by opening night, the painful new reality for Avalanche fans living in the metro Denver area will be: there will be no way to see their games. Well, not legally anyway. That includes road games, by the way. If you are a Denver-area subscriber to either DISH, Comcast/Xfinity or DirecTV, you will not be able to see Avalanche home or road games on Altitude, period.

The NHL, Miller said, will not do something like lift the blackouts on Avs games on their Center Ice or NHL.TV packages. Why not? Because, essentially, if that genie got out of the bottle, every other city’s fan base would want the same thing. This is a business, let’s not forget.

Right now, Miller said the same “bad deal” remains on the deal for Altitude from the Big Three: Take a 50-60 percent cut from the previous, five-year carriage agreement that expired earlier this month and be placed on a pricier sports tier, or go pound sand.

“Right now, there’s nothing reasonable on the table,” Miller said. “So, we’ve got to get creative with it. We’re trying to get creative with it. We’re (exploring) other avenues, other things outside of just sports, to figure out a way to get these deals done. That’s what’s changing every day. But right now, we haven’t found that.”

Miller knows there are plenty of fans who say “Look, Stan Kroenke is already a rich guy. Just take a little less money and put the games on for the fans.” But Altitude is a 50-60 person company, with a separate budget and operating expenses. Sure, it’s all funded by KSE in the end, but at the rates currently proposed by the Big Three, Altitude, if it were a standalone business, would lose a lot of money, Miller says. They would “go out of business” at those kinds of terms the Big Three want. Losing lots of money is not something Stan Kroenke wants. So, here we are.

“It’s a bad year for these contracts to be coming up. You look at the various carriage issues with the NBA, the NFL, you go down the whole list…I just got back from the NBA meetings where they showed all the carriage issues they have. You know, the Fox Sports Regions not being shown on DISH anymore,” Miller said. “The Big Three have decided to make a business change. Altitude, being an independent network, is caught up in that change. We’re a small player in the overall scope of it. We’re just a rounding error to them. And we realize that they’re going through a business change, and we can accept that. But when you see the business change – but it’s not happening to other regional sports networks…it’s not happening to the seven Comcast regional sports networks, it’s not happening to the four AT&T regions. Comcast isn’t offering those same deals (like they are with Altitude) to (their regional sports networks). DirecTV isn’t (offering the same deals) to their AT&T regional sports networks. We’re the only regional sports network in the country that is being offered this amount of a cut. A lot of fans say ‘just take the deal.’ Well, you’re not going to want us to take the deal, because we’re gonna be out of business with that deal, and you’re gonna be back at square 1, trying to find the games, and nobody actually doing the games.”

The big cable companies are losing subscribers every day to so-called “cord cutters” and there is probably no stopping that. So, they’re looking for ways to either save money any way they can, or derive new revenue from their own streaming services or the introduction of things like higher-priced sports tiers. The cable companies have said other regionals such as Altitude can expect the same rough treatment in future carriage deals, that, as Miller said they were told, “that other dominoes will fall.” But right now, Altitude is feeling unfairly singled out.

An uncomfortable reality, as well, for cable companies and sports leagues/teams right now is that there are any number of overseas-based websites where fans can turn to stream games for free. Get yourself a virtual private network, find a streaming site and you can watch the games, for free, with picture quality that very often is as good as any HD on a TV. (Read this good Yahoo article to learn more on just how freaked out leagues and cable companies are by this). Per the Yahoo article, people made 362.7 million visits to sports piracy websites in January 2019 alone. That’s billions and billions of dollars in lost revenue, and nobody seems to have figured out a way to stop the piracy sites.

Right now, bars and restaurants in Denver and surrounding areas, ones who depend on good walk-in crowds to watch Avs or Nuggets games on their big-screen TVs, have to ask themselves: do we take a chance and stream the games from one of these piracy sites? Otherwise, just like any other Big Three cable subscriber, they have no other way to broadcast the games. And that goes for their own Center Ice or NHL.TV packages as well. Altitude can’t legally be shown on them in Denver, with no carriage agreement.

If a bar decides to flout the regulations and show the game from a pirated website, they put themselves at legal risk, because a sports league or cable company can say, “You’re profiting right now by using our product illegally.” The same can be said to any individual who watches from a piracy site, but what are the cable companies going to do: sue millions of people by looking up their IP addresses? The legal costs alone of doing something like that probably be more than they’d ever recoup even if a judge ruled in their favor.

In a sense, the sports/TV industry is finally going through the same things the music industry did with Napster, or that newspapers did when classified ads became free on Craigslist. They had to adjust their business models. Cable TV, regional sports networks and all their offshoots – they’re having to go through it now too.

“There’s no doubt our world has changed, and viewing habits have changed, and the options available,” Miller said.

About the piracy issue, Miller heard, at the NBA meetings, “that the NBA, specifically, has put a lot of effort into shutting down Reddit and these VPN networks. The NHL, I have not asked that question to, but we’re all aware that people can get these games illegally.”

I asked Miller if any of the 50-60 Altitude employees would see their jobs become in jeopardy if there is no carriage agreement – with anyone – into the regular season and beyond?

“There hasn’t even been a conversation about that. We’re going to put on the best broadcast (as we ever have). There is thinking that ‘gee, Altitude is going to be bankrupt in three months and everybody is going to lose their jobs,'” he said. “It’s going to be a process. It’s going to be a business process that we ultimately are going to figure out. We don’t want this to be a short-term fix. We want it to be a long-term fix.”

I asked why things seem so hopeless with the Big Three? Why isn’t there some smooth middleman brokering a deal, soothing both sides?

“That’s the most frustrating thing,” Miller said. “When you look at the math that you’ve always had, like, ‘it’s 20 dollars to make our product and you’ve been paid 23 dollars on that’ – so that there’s a decent profit margin on that – and it’s like they’re saying, ‘we’re only gonna pay you 19 dollars now for your product, and you settle somewhere. Now it’s like: it goes from 23 dollars to seven dollars. That’s not a sustainable business. You can’t make a product for 20 dollars and sell it for seven.”

(The entire audio of my talk with Ken will be available soon on our podcast, “Can’t Hear What Jeremy Says.”)