[opendtv] Re: News: Northwest Station Pulls Signal In Retransmission Battle
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Thu, 4 Jan 2007 08:54:00 -0500
At 11:10 AM -0500 1/3/07, Manfredi, Albert E wrote:
I don't think so. Broadcasters and the umbillical distribution media
behave like any business partners would. For example, like well-known,
famous authors and their publishers. The publisher has a lot of leverage
until the author becomes famous, then the author has all the leverage.
There's nothing the FCC should do to change these business basics.
This is rubbish Bert. There is no analogy here. Books are not
advertiser supported. You pay for the content directly.
A better analogy would be magazines like the one I write for. There
is NO subscriber fee - it is sent to you each month courtesy of the
advertisers who pay the costs of publication, and any profits that
the publisher can make.
Broadcasters have traditionally received compensation in one of two ways:
Commercial - the ads pay for the content
Government run/public - your taxes pay for the content
We have been over this. I don't know the details of how much ad revenue
goes directly to the content creators/broadcasters in Euro TV systems,
vs. ad revenue to the distribution medium and from there to the content
creators, but that's where the differences lie. For example, if Freeview
gets none of the ad revenue directly, then it makes sense that their
revenues have to come from the content creators/broadcasters. If
Freeview got all the ad revenue, then it would make sense that they
would pay the broadcasters for the content. If you fall somewhere
inbetween, then you can expect a more complicated formula. And if
subscription fees are involved, then obviously the content
creators/broadcasters are going to want a piece of that also.
More rubbish. Content creators are paid in one of three ways:
Directly via an agreed contract price - this is even true for the
shows run on PBS. They typically get more for the first run of
content, and make their profits from syndication.
Via some form of barter agreement, where the content creator and the
distributor both get ad slots within the show.
The content creator pays the distributor to air the program - e.g.
most religious broadcasts and those obnoxious infomercials.
Freeview is a pure distribution play, although the main owners are
also in the content creation business. The networks that are NOT
affiliated with the companies that own and operate Freeview pay a
substantial fee to have their content delivered. In addition to this
they pay for the content that they distribute via Freeview (they
either make the content or buy it). To pay for all of this they run
ads - hopefully the ad revenues exceed the costs of distribution and
content.
Subscriber fees are a new wrinkle in the television business. The
cable industry, which has its roots in the U.S., started as a pure
-re-distribution play. CATV systems provided a valuable service to
broadcasters, delivering their content to areas where OTA reception
was either poor or non-existent. There was no talk of must carry or
re-tranmsission consent in those days. Actually, a good friend of
mine, who is now VP of Engineering for a broadcast group, wrote a
thesis in 1970 detailing why cable systems should compensate
broadcasters for their signals - he was way ahead of his time.
The only justification for compensation is that the cable system is
profiting from the redistribution of the broadcast signals. In the
early days of CATV systems, there were no profits to speak of. Then
something happened that change the rules of the game.
In the early '80s, thanks to satellite distribution of networks, the
cable industry realized that they could get into the content business
too, thus enhancing the value proposition for prospective
subscribers. This was particularly important for industry growth, as
most homes had little need for cable if they got good OTA reception.
So Ted Turner, John Malone and others got into the content side of
the business. To help finance these start-up networks they added
small subscriber fees to the bills of cable customers - this revenues
was in addition to the ad revenues that the new networks generated.
Even with this, most of the cable networks operated at a loss in the
'80s.
But this fundamentally changed the view of cable by broadcasters.
Cable was now a competitor. A competitor that had the ability to
collect additional revenues directly from the viewer.
The rest is history. Most of us in the U.S. now pay twice for
advertiser supported TV, via the cable bill and at the checkout
counter. All of the "competitive bluster" between broadcasters and
the multichannel services is pure theater, with the intent to blame
the other guy, while everyone takes wheel barrel loads of money to
the bank. Ironically, in 1992, when Congress re-regulated the cable
industry because of skyrocketing prices, they exacerbated the problem
by giving broadcasters the ability to reign in their new competitor,
giving them retransmission consent.
At first this was used by the media conglomerates to gain preferred
placement on the cable systems for new NON-BROADCAST networks. Then
they went on an acquisition binge, buying up most of the cable
networks. Time Warner, the company that the cable industry built to
create content became the fifth big media conglomerate. Now that the
four broadcast networks and TW have control of 90% of the audience
AGAIN, they are using retransmission consent to reach deeper into our
wallets. Cable rates are up 95% over the past decade.
This is a classic example of the "unintended consequences" of
Congressional action. They stick their noses into something making
all kinds of claims that they are protecting consumers, while they
give the special interest the ability to stick it to us even worse.
Same thing happened with almost every provision of the 1996
Telecommunications Act re-write.
The other difference is that in the US there are many different
"freeview" systems, owned by the content creators in part and owned by
other companies. I don't see why you ignore the differences created by
the different business structure. There is no perfect system. They are
just slightly different ways of achieving the same goals.
Name ONE.
Exactly the same as cable. You can pay for the cost of being hooked up,
since both cable and Internet access require labor-intensive
infrastrutcures, and then you may need to pay extra for the content. You
*can* subscribe to cable only for the Internet access, no TV, of course,
and that's just like any other ISP.
No it's not the same Bert. It may be true for the broadband side of
cable, but if you subscribe to TV services you are paying for
carriage AND content. Even a portion of the fee for lifeline cable
services goes to the broadcasters who dominate that tier.
And from your ISP, when content is high valued content, such as TV
shows, movies, or music, you will see plenty of restrictions on
accessing it through the Internet. I can watch the news from RAI or TF1
by paying only my broadband connection fee, but I cannot watch other RAI
or TF1 shows this way. And during the World Cup, even that news access
was limited.
I already acknowledged this. You can also buy virtually anything via
the Internet, not just downloadable bits. But you are not paying fees
for stuff that you don't use, as is the case with the "umbillical TV
services. I get about 60 channels from Cox, and NEVER watch about 40
of them, however, because of the tiering structure, I still have to
pay fees for the content that I am not watching.
Were all TV content to be made available on the Internet, you can bet
that content creators would want a piece of that broadband subscription
fee from the ISPs. They have a right to more revenues if they get more
viewership, every bit as much as a book author does when his book sells
in other countries.
What right?
If Amazon sells you a book, what right does the ISP or the big pipe
provider have to a portion of that transaction? The IPS and the
company from which it is buying access to the Internet are paid by
you for that access. You are the one that decides where to go on the
Internet. The ISP is doing nothing to increase viewiership - they are
just providing access.
Remember AOL - Steve Case tried to bundle content and carriage. In
the end he lost that war, as the content providers preferred the
model where carriage and content are decoupled.
The majority of web portals that provide useful content today are
using the advertiser supported model. Anyone who wants to use the
Internet to distribute TV content today must have a revenue model to
support that business. They either make you pay directly to download
the content, or they sell ads on the website and stuff ads in the
content.
But that may change if AT&T and other have their way in the Network
neutrality wars.
Why is there not a breakdown on our monthly cable/DBS bills
that informs us what we are paying for.
Good point. There should be. Not that this would necessarily change
anything.
Really. It would set off a firestorm, as consumers began to
understand just how much they are paying for the stuff that they
don't watch.
> Why is the industry so opposed to ala carte selection of
channels?
Because it costs more to them. Why do manufacturers of silicon always
seem to quote prices for quantities of 10,000 or more?
Yes it would cost them, but not in the way you are imagining. This is
not a commodity, where price is based on volume. This is a "store"
where you are asked to pay a little bit for everything in the store,
even though you are only buying a few things. The things that
everyone wants are more expensive, while the things that hardly
anyone wants are less expensive. If you are unlucky enough not to
like sports, you still pay for ESPN.
The most often cited reason why ala carte is not feasible is the
analog nature of the extended basic tier. The only way the cable
system can let you choose channels on an ala carte basis is to
install blocking filters on the channels you don't want. They already
do this for the lifeline service, blocking all channels above a
certain number. So they spend a bit more to provide a cheaper service
- go figure.
They could also do it via an analog cable box, of which they have a
huge inventory. The only problem is you don't need a cable box to
watch analog cable, thanks to the All Channel Receiver Act that put
cable tuners into all legacy TVs in recent decades.
The easy way to do it is digital. This is still difficult for cable
systems today, but the DBS systems could do it in a heartbeat.
The real reason that neither cable nor DBS want ala carte is that it
would plunge a stake, right into the heart of the highly profitable
tiering vampire. IF consumers could choose and pay only for the
channels they watch, two things would happen.
1. Subscriber fee revenues would plunge for everyone.
2. MANY networks would drop their subscriber fees altogether to
encourage people to keep them in their channel lineups.
One of the most important metrics for any cable network is the number
of homes in which their content is accessible. The Fox Corporation
PAID cable systems about $700 million to get Fox News Channel onto
their systems so they could build ratings. They had to do this
because the cable industry owned CNN and had little interest in a
competitor. Now that FNC is popular, they are recouping that
investment, as the average subscriber fee in new carriage
negotiations for FNC is about $0.70/month.
The actual ratings for any cable network are the basis for ad rates,
but you can't get good ratings if most consumers choose not to pay
for your network. If ala carte were to be come the law of the land,
you would see a rush to eliminate subscriber fees so that these
networks would not lose access to much of their potential audience.
But all of this is merely of academic interest. The media
conglomerates have pushed the cost of content so high that it may
soon be feasible to sell content directly via the Internet and drop
the multi-channel TV services all together.
IF you lived in the U.K. you
> would now have access to more than 30 channels of unique
content, and it would not cost you any more than you are
now paying.
In the UK, or in Italy, I would have to pay taxes for the national
broadcast net.
What's that got to do with it? We pay taxes in the U.S. to support
the national broadcast TV and radio networks.
The difference is that in the UK you now have access to an expanding
world of content, while here in the U.S. the content that is
available free over the air is contracting as more and more of what
people actually watch moves to a subscription service. Have you
noticed the ESPN branding on ABC sports events? It's just a matter of
time before FOTV in the U.S. is REALLY a vast wasteland.
But I turn that comment of yours around. If you and 85 percent of other
households were less willing (complacent) about caving in to the
umbillical services, we WOULD HAVE a much better OTA network. As you
yourself have said many times, broadcasters are happy to depend on cable
and DBS distribution, so they don't take their OTA network as seriously
as they might. And this is YOUR FAULT. Content creators would make sure
their OTA network was good, if consumers demanded it. It is ludicrous
that people in Gainesville don't even have access to the 7 basic OTA
networks. Whose fault is it that you don't? Consumer complacency. The
same reason US automakers concentrate so much effort on building obscene
behemoths instead of interesting cars. Consumers are the problem.
This is a circular argument. The reality is that most of us are
willing to pay for a multichannel service because we are tired of the
formulaic programming that the broadcast networks now offer. What
has changed is that we now have choice and multiple TVs in the home
so that everyone gets to watch what they want, rather than sitting
down together for the evening to choose between 4 programs.
As for the economics of broadcast TV in Gainesville and other small
markets, you must look at how things evolved. If everyone in
Gainesville got pissed and cancelled their cable or DBS subscriptions
I agree that it would not take long for OTA broadcasters to fill the
void. But it ain't gonna happen. The only way to change the
competitive dynamics of TV today would be for broadcasters to
compete, rather than relying on competitors for carriage and now for
additional revenues from retransmission consent. There IS no
incentive to compete, because Congress made it easy for broadcasters
to maintain the statur quo.
By the way, I'm happy to report that our independent MHz Networks
station, on 30-3, now transmits the "France 24" all-news network, FOTA.
As far as I'm concerned, a perfect substitute for cable-only CNN. You
say your can't get that in Gainesville? Tsk tsk. Don't blame France 24.
Is Manfredi French?
This could explain MANY things...
;-)
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