[opendtv] Re: CBS Affiliates Board, Network Agree on All Access OTT Terms | Broadcasting & Cable

  • From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Sat, 21 Mar 2015 12:02:03 -0400

> On Mar 18, 2015, at 7:28 PM, Manfredi, Albert E 
> <albert.e.manfredi@xxxxxxxxxx> wrote:
> 
> Craig Birkmaier wrote:
> 
>> If the transmitters are turned off, what value do affiliates have
>> for CBS?
> 
> ??? What value do the affiliates have for CBS All Access, Craig? They provide 
> the local content and they are the source of the "live" streams to the ISPs. 
> In other words, they keep the same CBS presence online as CBS has OTA. As 
> opposed to something like Netflix, HBO, or HGTV, which are not 
> market-specific TV sources. (I don't know whether the broadcasters will also 
> be distributing video servers at edges of ISP nets, topologically speaking, 
> but that could be another role.)

Nice!

So now there is value in a market based system with affiliates.

For years you have argued against the market based broadcast system, suggesting 
we should move to national broadcast networks like those in Europe. Now you 
tell us that market based FOTA stations add value. Given that OTA transmitters 
are limited in their geographic reach, the market based system does make "some" 
sense. 

But you also argue for the geographically unbounded Internet, and tell me I 
should be able to get MVPD service from Comcast. You tell us that the content 
owners do not need geographically restricted middlemen, be they FOTA broadcast 
affiliates or geographically limited MVPDs. 

Now you argue for them. Is this just your typical get on the other side for the 
sake of argument, or have you changed your position?
> 
>> You are the one who keeps telling us they don't need middlemen -
>> especially middlemen that don't pay them for the content.
> 
> We don't need OBSOLETE middlemen, who add no value, of course. We need 
> middlemen relevant to the new technology. Why do I have to repeat the obvious?

So now FOTA broadcasters are relevant to the Internet. Interesting.
> 
>> But they ARE getting subscriber fees from more than 100 million
>> MVPD homes, and from CBS All Access NOW.
> 
> And they are losing some of these loyal, faithful, do-as-you're-told 
> subscribers, as we speak.

CBS gets no compensation for the FOTA affiliate audience. In fact it costs them 
money in ad avails that the network could sell. They only get a split of the 
subscriber fees from the MVPDs, and now from CBS All Access, which is 
specifically designed to attract the unfaithful cord cutters. 

> So, they could just become another subscription-only channel, of course. If 
> they do, they will know that other channels will replace them as bread and 
> butter everyone-has-access-to-them TV content sources.

There are only a handful of live streaming channels that "everyone" has access 
to Bert, and even these are moving to some form of subscription for live 
streams. If anything, the shift to the Internet appears to be limiting access:

The new Apple OTT service won't have NBC Universal content.
Sling does not have a network add on bundle yet.
Sony Vue does not have Disney content.
Hulu just purchased exclusive OTT rights to Empire.
Amazon, Netflix and HBO are investing heavily in exclusive content.

Suddenly the extended basic MVPD bundle is looking more attractive, if only for 
the fact that it does not require multiple overlapping subscriptions to get all 
the channels you want.

On the positive side of the argument for MVPD bundles is access to any network 
that wants carriage. The FCC program access rules require that a content owner 
offer their live streams to any MVPD that wants to license them. We have 
discussed the current FCC NPRM that seeks comments about extending the program 
access rules to Internet OTT services operating as Virtual MVPDs. I found this 
excerpt from an analyst at Seeking Alpha rather interesting:

> Some have pointed to recent Net Neutrality rules proposed by the FCC as the 
> reason. Actually, the Net Neutrality rules were probably not as important a 
> factor as the recent blog post by FCC Chairman Wheeler, which I wrote about 
> in Apple's New Television Opportunity. In the blog, Wheeler proposed a very 
> simple rules change not really related to Net Neutrality.
> 
> In the proposal, the rules regarding Multi-channel Video Programming 
> Distributors (MVPDs) would be made "technology neutral." Cable and satellite 
> video distributors are classified as MVPDs. Making the MVPD classification 
> "technology neutral" sounds like such an innocuous little change, but it has 
> huge consequences.
> 
> Under current FCC rules, content providers such as the TV and cable 
> "networks" cannot withhold content from any MVPD that wishes to distribute 
> that content, as long as the MVPD pays the appropriate licensing and 
> distribution fees to the content provider. It's a "level playing field" 
> requirement that is typically mandated by the FCC's legal charter.
> 
> In proposing the rules change, Wheeler specifically had in mind distribution 
> via the Internet rather than cable or satellite. The simple, innocuous rules 
> change that Wheeler proposed would make it impossible for content providers 
> to block Internet-based distribution of their content.
> 
Apparently many content owners are objecting to extending the program access 
rules to the Internet. Obviously we are seeing this play out in the new OTT 
services that do not offer "a level playing field." That is some of the major 
networks are not included.

Even as this is happening in the U.S., Canadian regulators are moving to force 
so form of Ala Carte on their MVPD services.

> 
> 
>> Despite your claims that you have access to tons of content, the
>> reality is that the trend is toward paying for live first run
>> content and program archives.
> 
> Chuckles. Remember how you predicted that OTA TV was only going to be for 
> reruns, and no high value content? How many years ago was that, Craig? 
> Decades?
> 
> Bert
> 
> 
> 
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