Cable One-KAYU standoff enters 4th week

A dispute between local cable television provider Cable One and Spokane FOX affiliate KAYU reflects the company’s strategy to focus on internet, not cable customers. That’s the contention of KAYU-FOX General Manager Doug Holroyd, who spoke as the standoff finishes its third week.

Cable One customers in the Lewiston-Clarkston Valley can’t access KAYU without special reception equipment, which Cable One has started providing to customers.

Cable One stopped carrying KAYU on Jan. 1, after a contract expired, in a move Holroyd estimates is affecting 7,200 of the 427,000 households KAYU reaches. The two sides were unable to reach an agreement over retransmission fees. KAYU is asking for an increase in its retransmission fees but has not disclosed any specific numbers. Cable One official says the increase amount to a hike of more than 70 percent.

Cable One has been negotiating on the matter for the last two weeks, spokeswoman Patricia Niemann said in an email.

The disagreement reached a boiling point less than a month after Cable One executives underlined their success in courting high-speed internet customers to stock market investors.

Roughly 70 percent of all new package sales are now high-speed internet only at Cable One, according to a Dec. 5 investor presentation.

“Some think that dropping Viacom (which has channels such as MTV) in 2014 was our strategic awakening,” the presentation states. “As you can see, we were already two years into our non-video-centric strategy by then. It was a tactic.”

Cable One began this approach in 2012 as the company recognized a downward trend in cable and telephone customers, according to the presentation. Since doing so, the percentage of revenue generated by residential high-speed internet and business services has climbed from 30 percent in 2010 to 54 percent in the first nine months of 2016.

At the same time, Cable One’s costs are declining. The company went from 2,254 employees in 2012 to 1,929 in 2016 – mostly through attrition. Trucks now go out about 394,000 times a year, compared with 970,000 times annually in 2007. Cable One fields about 3.33 million calls annually, compared with 5.42 million in 2010.

Wall Street appears to like where Cable One is headed. Its stock price is more than robust following its spin-off from The Washington Post Company in July 2015. It was $610.68 per share at the end of trading Friday and ranged from $390 to $635.85 per share over the last year.

Even as Cable One changes, it remains committed to its cable customers, Niemann said.

“Cable One has never planned to stop providing video service,” Niemann said. “We are, however, responding to market demands that have increased our focus on high-speed internet and business services.”

KAYU’s Holroyd said Cable One was the only one of 16 cable and satellite television providers nationwide not to reach a retransmission agreement with Northwest Broadcasting, which owns KAYU as well as CBS, ABC, NBC and FOX affiliates nationwide.

Northwest Broadcasting, based in Okemos, Mich., offered each of the 16 basically the same rate, which reflects growing costs for equipment, employees and programming, Holroyd said.

“Cable One was able to reach agreements with more than half a dozen broadcasters across the country recently,” Niemann said. “We were hoping to do so with Northwest Broadcasting as well.”

As Cable One and Northwest Broadcasting argue, the FOX broadcast of the Super Bowl on Feb. 5 is getting closer. The timing of the outage is a result of the contract dates, Holroyd said.

“To be off doesn’t help (Cable One), and it doesn’t help us.”