[opendtv] Re: Why aren't there more converter boxes?
- From: "Dale Kelly" <dalekelly@xxxxxxxxxxx>
- To: <opendtv@xxxxxxxxxxxxx>
- Date: Fri, 26 Jan 2007 14:12:01 -0800
comments interlineated:
Craig wrote:
> I am not saying that everyone is rolling in money, certainly not the
> independents, but things are not nearly as bad as you portray.
>
> My point is that there has been plenty of revenue available to
> re-invest in a new business model.
> And I would also point out, that my Utility idea is
> based in the concept that revenues for the larger markets are used to
> help build and operate the infrastructure in the smaller markets.
Yes, lets apply the socialist fix and require the very successful to support
the many who might not be doing as well. A means test perhaps? ;~(
> In the multichannel TV business ONLY CONSUMERS PAY FOR PROGRAMMING
> COSTS. The cable and DBS system simply collect the fees and send the
> checks to the programmers.
And as it should be! The broadcasters purchase programming and cable
companies make significant income from carrying broadcast stations. The
broadcaster simply want a piece of that action in return. Now, if the cable
folks actually provided the broadcast stations for "free", it would be
different story.
> Your case MIGHT be more believable, if not for the fact that in the
> UK, cable networks and broadcasters are PAYING for the right to
> deliver their programming via Freeview, which does not charge a dime
> in subscriber fees.
That Craig is a non sequitur. The UK Freeview system utilizes the national
TV transmission system constructed over the years, mostly at taxpayer
expense - and a model for your Utility plan above. Currently I believe that
system is now partially supported by the UK TV owner license fees. Had such
distribution network been constructed in U.S. and fees were in line,
broadcaster would certainly pay to utilize that service.
In a perfect world your solution might be best but in this world, where
broadcasters have already paid billions to twice construct their private RF
systems - once for analog and a second for digital - your solution simply
won't gain any traction. Now, if the government wants to construct such a
utility using potential revenue from it's taking of additional spectrum,
that might actually work.
> -----Original Message-----
> From: opendtv-bounce@xxxxxxxxxxxxx
> [mailto:opendtv-bounce@xxxxxxxxxxxxx]On Behalf Of Craig Birkmaier
> Sent: Thursday, January 25, 2007 9:00 PM
> To: opendtv@xxxxxxxxxxxxx
> Subject: [opendtv] Re: Why aren't there more converter boxes?
>
>
> At 4:41 PM -0800 1/25/07, Dale Kelly wrote:
> >Let me *again* remind you that one size does not fit all when
> referring to
> >broadcasters, as you continue to do while sounding like a broken record.
>
> I agree that one size does not fit all. But the reality is that half
> of the revenues from OTA broadcasting come from the stations - In
> excess of $15 Billion per year. Admittedly some of this revenue goes
> to the network O&Os; perhaps as much as 35%.
>
> That still leaves many billions for the rest.
>
> >"Broadcasters" fitting your model are actually the Networks, who are the
> >Major Media companies (who have the billions) and who own only a
> relatively
> >small percentage of the nations broadcast stations (less than
> 10% IIRC). The
> >second tier in that group, IMO, consists of the top thirty markets non
> >network 0wned affiliates, who might have millions, though they do pay for
> >the networks programming.
>
> The profit margins for network affiliated stations in the top 30
> market are in the range of 25 to 35%, with duopolies achieving as
> much as 50% profit margins. In the top fifty markets the average
> profit margin is above 25%. Even in the rest of the top 100 markets
> the profit margins are above the average for most businesses ( the
> big oil companies average in the range of 8-10%.
>
> I am not saying that everyone is rolling in money, certainly not the
> independents, but things are not nearly as bad as you portray.
>
> My point is that there has been plenty of revenue available to
> re-invest in a new business model. It might take some cooperation
> among the survivors, just as there was cooperation in the early days
> of TV when Network compensation was a necessity to enable TV to reach
> smaller markets. And I would also point out, that my Utility idea is
> based in the concept that revenues for the larger markets are used to
> help build and operate the infrastructure in the smaller markets.
>
> What is even more relevant, is that if broadcasters would compete in
> the multi-channel TV business, rather than relying on cable and DBS,
> they could generate significant new revenues from premium services.
> it's all about the business model and using the spectrum to provide
> competitive services.
> >
> >There are many other lower tier broadcasters who actually own
> the majority
> >of stations and where profits are from moderate to non existent.
>
> I don't believe this, unless you are talking about independents and
> LPTV stations.
>
> >Those
> >Broadcasters have very little in common with the Media Networks and those
> >who are the Network affiliates also pay the networks for the use of their
> >programming; in past years networks actually paid the station owners
> >compensation to carry there programs. And, don't forget the PBS
> network, a
> >completely different model.
>
> Yes, I am aware of network compensation. it was very important in its
> day. Then virtually all stations began to operate profitably in the
> mid to late 80s. One could make an analogy to the early days of
> cable, when the collection of subscriber fees for cable networks was
> critical to industry growth, as ad revenues were not sufficient to
> cover the startup and operating costs of these new networks.
>
> That was then.
>
> Today virtually all of these networks could survive without the
> subscriber fees, just as broadcasters can survive without
> retransmission consent payments. But the precedent was set, and now
> the consumer pays twice, via their cable DBS bills and at the
> checkout counter.
>
> I saw an analysis of Internet media services today that was critical
> of the fact that they do not generate enough advertising revenue.
> This totally misses the point. The public is sick and tired of
> advertising bloat, not to mention having to pay ever higher bills to
> the cable and DBS companies. We are reaching the tipping point,
> where it will be possible to pay directly for content WITHOUT ADS,
> instead of the monthly fees for content that we don't even watch that
> is full of ads. I watched several episodes of 24. The ad pods are
> almost as long as the program segments. I'll try to record and count
> the ad minutes next week, but I suspect it is approaching 25 minutes
> per hour.
>
>
> As for PBS, it has a different, and apparently sustainable business
> model. And multicasting is a key component of their model for the
> future.
>
>
> >As an aside: IMHO there is nothing improper about passing a
> share of these
> >Network programming costs on to the Cable companies in the Transmission
> >Consent negotiations.
>
> Your statement sounds a bit like a popular cliche that makes the
> rounds on talk radio.
>
> "Businesses do not pay taxes."
>
> The reality is that businesses just collect taxes, which are
> incorporated into the cost of the products we buy. In the end, ONLY
> CONSUMERS PAY TAXES.
>
> In the multichannel TV business ONLY CONSUMERS PAY FOR PROGRAMMING
> COSTS. The cable and DBS system simply collect the fees and send the
> checks to the programmers. This is why cable rates keep going up
> every year at rates that are 2-3 times the inflation rate. In the
> next few years these bills will go up at least $5 per month to pay
> for broadcasters retransmission consent fees.
>
> Your case MIGHT be more believable, if not for the fact that in the
> UK, cable networks and broadcasters are PAYING for the right to
> deliver their programming via Freeview, which does not charge a dime
> in subscriber fees.
>
> Go figure.
>
> Regards
> Craig
>
>
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