[opendtv] Re: Networks Threaten To Pull Channels Off The Air If Aereo & Dish Win Lawsuits
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Sun, 21 Apr 2013 15:58:01 -0400
On Apr 17, 2013, at 12:17 PM, Gary Blievernicht <garybliev@xxxxxxxxx> wrote:
> My understanding is that the networks have ceased "network compensation" and
> for the most (maybe all) part are no longer paying stations to broadcast the
> network programming. In some (many?) cases the stations are now paying the
> network "reverse compensation" which will vary by network, and by content
> (e.g. Sports rights) the indirect split of revenue with local stations is by
> structuring the programming with holes for local commercial insertions.....
> and the networks may well still need to make those opportunities available to
> the MSOs. As you mentioned, the networks would receive the full amount of
> "retransmission consent" (or equivalent) from the cable/satellite (MSO)
> groups.
Yes, network compensation is very rare these days; that went away a long time
ago.
But stations STILL DO make a big chunk of their revenues from the ads they
insert into network programming; in recent years the networks have been
reclaiming some of the commercial inventory, especially in sports programming,
as a means to pay for the high program rights. For the past decade most of the
"reverse compensation" has taken the form of a split with the networks, in the
retransmission consent fees collected by the stations.
Thus, is the networks went direct with the MVPDs, they would get 100% of
retrains fees AND the commercial slots now sold by the stations.
> Alternative: Stations are required to make one signal available to viewers
> at no charge. The "network" programming could become a secondary service,
> which could be encrypted and use conditional access on a subscription basis.
> O-T-A viewers would need a TV set that can be addressed (another box?) which
> might be interesting. The retro-TV services, or Live Well, could be the free
> content.
The idea that stations could use portion of their spectrum for subscription
services is certainly not a new one; USDTV tried to compete with the MVPDs
using a portion of the bits from broadcasters in the markets where they
tried…and failed. This approach had the advantage of a company that provided
the subscriber hardware, customer service/billing infrastructure, and
additional channels that were not available Free OTA.
One of the major reasons that the MVPDs have become the dominant form of
distribution is their ability to collect the subscriber fees for the stations.
If stations decided to compete with the MVPDs they would need to have
"infrastructure." They might be able to set up customer service/billing
companies in each market, but they would need a significant number of
subscribers to make this economically viable…certainly more than the 15% of
homes that still watch the FOTA signals.
The larger risk for the networks is that consumers will continue to simply not
watch at all, or that a real marketplace will replace the mess we have today
where we all pay fair prices for the stuff we watch. With the average household
now spending about $100/month for their TV fix, we may finally be copse to the
point where we just pay for what we consume.
Regards
Craig
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