[opendtv] Re: FCC: Chairman Wheeler comment on Dish-Sinclair dispute
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Mon, 31 Aug 2015 09:37:49 -0400
On Aug 30, 2015, at 7:24 PM, Manfredi, Albert E <albert.e.manfredi@xxxxxxxxxx>
wrote:
Whatever you may believe the original intent of the 1992 Act to
be, it failed miserably,
It may or may not have. Hard to say, since we don't know what the alternative
universe would have looked like. Anyway, that's beside the point.
Take away retransmission consent and where would we be?
That alternative universe would look more like the cable industry before 1992.
No doubt the broadcast congloms would have tried to buy their way into the
cable bundles, but they would not have had any leverage.
The Fox News Channel serves as a good example. Fox used retrans consent to
launch the FX cable network. But the cable industry was all in for CNN, and
resisted efforts by broadcasters to create competitive news channels. Here is
an excerpt from Wiki about the situation:
To accelerate its adoption by cable providers, Fox News paid systems up to
$11 per subscriber to distribute the channel. This contrasted with the normal
practice, in which cable operators paid stations carriage fees for
programming. When Time Warner bought Ted Turner's Turner Broadcasting System,
a federal antitrust consent decree required Time Warner to carry a second
all-news channel in addition to its own CNN on its cable systems. Time Warner
selected MSNBC as the secondary news channel, not Fox News. Fox News claimed
that this violated an agreement (to carry Fox News). Citing its agreement to
keep its U.S. headquarters and a large studio in New York City, News
Corporation enlisted the help of Mayor Rudolph Giuliani's administration to
pressure Time Warner Cable (one of the city's two cable providers) to
transmit Fox News on a city-owned channel. City officials threatened to take
action affecting Time Warner's cable franchises in the city.
A lawsuit was filed by Time Warner against the City of New York, claiming'
undue interference with (and inappropriate use of) the city's educational
channels for commercial programming. News Corporation countered with an
antitrust lawsuit against Time Warner for unfairly protecting CNN. This led
to an acrimonious battle between Murdoch and Turner, with Turner publicly
comparing Murdoch to Adolf Hitler; Murdoch's New York Post ran an editorial
questioning Turner's sanity. Giuliani's motives were also questioned, since
his wife was a producer at Murdoch-owned Fox station WNYW. In the end, Time
Warner and News Corporation signed a settlement agreement permitting Fox News
to be carried on New York City cable systems beginning in October 1997, and
on all Time Warner Cable systems by 2001 (although Time Warner still does not
carry Fox News in all areas).
Another lesson learned...
The 1992 Cable Act requires that every three years, every local commercial
television station has the right to elect either must-carry or retransmission
consent. The initial election was made on June 17, 1993, and was effective on
October 6, 1993.
CBS elected to ask cable systems for monetary compensation for the signals of
its affiliates. The other networks elected to ask cable systems to carry new
networks created for the extended basic bundle, and required that these new
networks get preferred placement in the channel line-ups. CBS came to regret
that decision, as they missed the opportunity to create new outlets for their
content, while the other broadcast networks grabbed beach front real estate on
the MVPD systems.
Ultimately, CBS was acquired by Viacom in 2000, in an ironic twist.
CBS created CBS Films in 1952 to handle syndication of CBS programming. This
division was sold and renamed Viacom in 1971 to comply with new FCC rules that
a prohibited television networks from owning syndication companies. Viacom went
on to create a television station group, and bought Warner Amex Satellite
Entertainment, which owned MTV and Nickelodeon and a share of Showtime and The
Movie Channel.
By taking the money, rather than using the leverage of retrans consent to build
a content empire, CBS became an acquisition target for Viacom. In 2005 Viacom
was split into two companies under the common ownership of National Amusements:
CBS Corporation got the "low growth" assets including the CBS broadcast
network. Viacom got the "high growth" assets including MTV Networks, BET
Networks, and Paramount Studios.
So we live in a universe created by the collusion of politicians and
regulators. A universe where the broadcast industry, largely created and
regulated by politicians, was losing ground to competition from the vertical
integration of cable systems (distribution) and cable networks (content). The
politicians intervened in 1992, giving the broadcasters the leverage they
needed to control the content side of the business. The end result is two huge
oligopolies for content and distribution that operate as legal monopolies.
We are at another critical turning point. Technology is enabling new
competitors.. What will the politicians and the oligopolies do to control
competition via the Internet?
Your arguments that the marketplace is working with this
neutral pipe are not convincing.
They are a lot more convincing than your arguments that pretend the Internet
changes nothing, Craig. TV content distribution, over the unwalled and
neutral internet, is a whole new ballgame. As you can see, I have explained
the various possible scenarios, and they are playing out in real life.
I agree that this is a new ballgame, and that the oligopolies have helped to
enable new "competitors" like Netflix and Amazon. But we are not seeing any
real breakthroughs, other than the logical shift from live linear to VOD for
high quality episodic programming. At best, the content owner club is expanding
a bit, however, as the NYT article that Monty posted suggests, the industry may
be too prolific in terms of creating more shows than the public can watch.
The largest change we are likely to see is some deflation in the price of the
big bundle, from about $70/mo to about $40/mo, and the application of good
human interface design to the front end of the systems used to help us manage
this huge ocean of TV content.
Once again, it makes no difference what the FCC attempts to regulate, if none
of the content owners or the viewing public care.
But both do care. The content owners want to maintain the upper hand that
allowed them to get us to this point. The public is tired of paying too mucth
tribute to monopolists.
Sling TV did not create itself out of special favors granted by the FCC (I
must have said this a dozen times). Any OTT site that tries to duplicate the
walled garden old school model will simply fail. Why? Because people already
know that old model, many are still subscribed in it, and they are abandoning
it. You don't abandon something just to jump in that same environment.
I believe you are completely wrong about this. Yes the environment is changing,
but the new model will still be controlled by the same special interests.
Correct. Only those wholesale services that Congress
determines need regulation...
Like MVPD services.
No, Craig. What gets regulated are unavoidable monopolies. And MVPDs are NOT
wholesalers. They are retailers. Look up the definition, Craig.
They are both. Comcast now owns NBC Universal.
What if CBS wants to sell its content to middlemen, as it has
done for decades?
Not a problem. OTT sites are not local monopolies. It's not like your MVPD.
I've said this many times. It is the monopolistic nature of the MVPD that
creates the market distortion. CBS can deal with a middleman OTT site, and if
they don't like that arrangement, they can switch to another OTT site
unilaterally. Or they can use multiple outlets, as they are actually doing,
to avoid the eggs-in-one-basket risk. Their content is now on Amazon, Hulu,
cbs.com, CBS All Access, and I think even on Netflix.
Just more middlemen from whom the content oligopoly can extract its pounds of
flesh...
And who put you in charge to dictate what station groups can reinvent
themselves into, to remain relevant in the Internet TV era?
Who put you in charge to tell Sinclair they need to become a CDN to survive?
Obviously Sinclair has a strategy and a plan to survive. Owning content appears
to be the holy grail.
So you are suggesting that content owners should eliminate middlemen
that bundle live and/or VOD content, and use a new kind of middleman
to distribute their bits.
These OTT site middlemen may or may not bundle live and/or VOD, but they
would certainly NOT be competitive, if all OTT site middlemen bundle using
the same formula, Craig. That's too obvious to have to repeat over and over
again.
They have no choice. You know this, because you keep telling us that the
content owners have the ability and control they need to dictate how their
content will be delivered. They are experimenting and listening to consumers.
They know they pushed the envelope too far with the high price and unnecessary
glut of the extended basic bundle. And they know that they can slash the stuff
that is unnecessary - the glut of rerun channels - and focus on the core
networks that people WANT.
The result will be:
1. Less expensive core bundles that will all carry these core networks;
2. More consumer choice in terms of mini add on bundles;
3. The ability to consume both live linear TV on any device, anywhere, and VOD
anytime.
4. Consumers will likely subscribe to both a MVPD bundle and a SVOD bundle.
5. Those, like you, unwilling or unable to pay for TV, will have access to FOTA
broadcasts and ad supported FOTI catch up services.
I've explained this **very many** times. It is the monopolistic nature of the
MVPD pipe that creates the market distortion.
You mean like the monopolistic nature of broadcast TV that the cable monopoly
challenged?
There is no such thing as market distortions, without the willing consent and
help of those who run to government to protect a competitive industry from
competition.
There has never been a competitive market for TV content, and the Internet is
not going to change that picture.
Yes, the congloms or other content owners can *and do* take advantage of
this. **But so do the MVPDs themselves**! Read the act, Craig. It has
stipulations on what kind of bundles the customers can be forced to buy, by
the MVPD, as one example. Ultimately sure, the FCC could even have regulated
the prices strictly.
The same old political cover. The politicians run to the aid of consumers - the
announced intended consequence, while they give leverage to an important
special interest - the unintended consequence. It should be obvious to you that
the 1992 act was a win-win for broadcasters. They gained leverage, and their
content was required for every cable subscriber, basic or bloated.
Cable just got some leverage back, as Title II regulation will entrench their
competitive advantage for wired broadband. And the current MVPD FCC NPRM will
allow the content owners to maintain their leverage with Internet MVPD services.
The FCC is currently trying to determine if this same leverage is
now being used to disadvantage would be MVPD competitors using the
Internet to deliver their services.
That's absurd. It's a bit like asking whether the stagecoach industry was
"unfairly disadvantaged" by the arrival of the railroad.
They were not. The stagecoach industry was replaced by busses.
The FCC, and Craig, are having a hard time understanding that the landscape
of TV distribution industry has changed drastically, due to technological
innovation. Of course the old order becomes threatened. Any attempt to
force-fit old rules on the new medium will simply fail, for lack of interest.
Lack of interest from the congloms and from the buying public.
Yeah righhhhhhhhhhhht.
Regards
Craig
Other related posts: