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Verizon looks to turn TV fee rules on their head

The company wants to pay providers not by the subscribers they can reach, but by the number of people who actually watch a show.

ESPN is a high-value television provider.
ESPN is a high-value television provider.
James Martin/CNET

Verizon wants to change how it pays television providers for their shows, according to a new report.

The company, which operates Fios TV, is currently in talks with several "midtier and smaller" television companies to pay them not for the number of subscribers their channels can reach, but by the number of people who actually watch their shows, according to the Wall Street Journal, which interviewed the company's executives.

"We are paying for a customer who never goes to the channel," Verizon Fios TV chief programming negotiator Terry Denson told the Wall Street Journal.

The payment structure would be passed on a "unique view" model in which one person who spends at least five minutes on the channel would count towards a fee, according to the Journal. Verizon would not need to pay for anyone who didn't actually spend that time on the channel.

Verizon's model is a drastic departure from the current state of programming, but it's perhaps an important one to consider. Television lineups are getting are overrun with channels that now cater to just about every niche audience. For the majority of customers, however, they're just speed bumps on their way to the channels they actually care about.

Whether such a dramatic shift will actually occur, however, seems unlikely in the near term. As Denson told the Journal, right now, his plan is a "head-scratching thing" among channels, and something that likely won't be endorsed quickly. The fees providers would actually pay to channels would also need to be evaluated.

There's also the issue of how demographics would be valued. Currently, channels with viewers that fit within more highly sought-after demographics, like ESPN, earn far more in fees from providers than others. Denson pointed out that his company pays $5.04 a month per household to ESPN. USA Network, which has about 300,000 more unique viewers, only receives 68 cents per month. Fees in the new model would likely be modified based on the value of the audience, as well.