[opendtv] Re: Apple's online TV proposal stirs interest from broadcast networks
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Mon, 4 Jan 2010 11:15:12 -0500
At 6:53 PM -0600 1/3/10, Manfredi, Albert E wrote:
Craig Birkmaier wrote:
Look how long it has taken for the Broadcast franchise to start a
significant contraction - decades. Just saw a study that said that
TV station revenues were down 22% in 2009.
Let's see what happens to ad revenues as the economy improves again.
See my response to John.
I continue to think that this means nothing much anymore. What is a
"broadcast network," when the OTA station groups run the majority of
OTA stations now, buy the content they air, and the subchannels have
no relation to the affiliated network?
Yes, they buy content from a variety of sources, as they have for
decades. The TV syndication market has always been the source of
content to fill in all the gaps in the broadcast network schedules;
no surprise that some of this content is making it to sub-channels.
John Shutt wrote:
Those who want to watch cable-only sports, news commentary, and
entertainment such as Monday Night Football, The O'Reilly Factor,
and Iron Chef America.
When the History Channel, TLC, and Fox News are available FOTA, I'll
drop cable.
John is representative of the vast majority of American TV homes.
Cable did not get where it is today by selling out to broadcasters -
they got there by competing with broadcasters AND by getting a second
revenue stream from subscriber fees.
In order for cable content to migrate to FOTA multiplexes, a station
must sell enough ads to cover not only the cost of the content but to
make up for the lost subscriber fees as well. Stations are simply not
in a position to pay $0.25 per viewer, per month to add a channel to
a multiplex that may not even generate enough ad revenue to cover the
syndication costs.
On the other side of the fence, however, broadcaster may be able to
attract new content start-ups who would have a tough time getting
onto cable and DBS systems. Here is an interesting story about one
such network:
http://www.tvnewscheck.com/articles/2010/01/04/daily.6/
Diginet BizTelevision Open For Biz
And remember Bert: Only a small portion of the content that local
broadcasters deliver generates the revenues needed to cover all of
the broadcast hours when they lose money.
It is no coincidence that the Fox Broadcast Network threatened to
pull their signal from Time Warner Cable systems, just before the
network's coverage of the Bowl Championship series began
Friday night - they reached a deal 30 minutes before the start of the
Sugar Bowl.
Scripps Howard pulled Food Network from Cablevision in a similar bid
to get higher subscriber fees. But they are NOT going to make this
content available to broadcasters who cannot afford it. More likely
they are telling irate viewers to switch to DBS.
One example. This TV, which is as far as I can tell transmits old
movies and TV shows, is carried by the Fox affiliate in Baltimore
and the CW affiliate in DC. And the MNT affiliate in DC carries
Monk, Stargate series episodes, and all manner of CBS and Fox
reruns, during off hours (even without a subchannel). Ion transmits
a very eclectic program mix, including their own Canadian-made
Durham County series.
Almost ALL of these programs are sold in the broadcast syndication
market. Cudos to ION for understanding that their survival may hinge
of being a content creator, not just a content distributor.
So, what makes this "broadcast networks" in your mind? I think it's
all up to the OTA station groups, what they morph into in the
digital age. This is not your old ABC/CBS/NBC fare that you assume.
I never made such an assumption. I actually worked in TV stations and
know all too well the realities of programming all of those non-prime
time hours at a loss.
> The question you should be asking is who operates the most efficient
storefronts and customer service organizations.
In fact, I ask myself this all the time. I think you continuously
underestimate how much of the monthly subscription fee of the MVPDs
goes into maintaining that work force and physical network they rely
on.
I've not seen the real numbers, nor have I even estimated them on
this forum. But it is easy to estimate that about 1/3 of their total
revenues now go to content providers in the form of subscriber fees.
I wrote recently that the cable industry is generating about $5
billion annually in subscriber fees for cable networks;broadcasters
are hoping to increase their take to more than $1 Billion in 2010.
The last major upgrade for the cable industry cost about $75 billion,
but this is amortized over a decade, so the annual cost is only
slightly higher than the subscriber fees now being paid.
Just consider this. To get broadband and telephone service from
Verizon, with no TV content fees at all, costs $70/mo. That's ADSL.
Yup.
To get TV service, initially you pay no extra for the FiOS setup,
needed to achieve adequate bandwidth for TV. But for the second
half-year that climbs to $95/mo just for the 3 Mb/s broadband and
telephone bill. After the first year?? Who knows. Then on top of
that, you add $12.99/mo for the unadvertized basic-basic service, or
about $20/mo for the basic service, but only promised for a few
months.
Or a combined 1-year package of basic TV, telephone, and broadband
for $100/mo. Initially.
Yup.
So very soon, you'll notice that if you had not caved in to TV over
physical cables, you can save quite a lot of money every month,
especially after the first 6 months to 1 year, and most of that has
NOTHING to do with the subscription fee kickback to the networks. It
just costs money to provide a physical network capable of carrying
HDTV. The cable companies have the same problem, and their fees are
not much different.
Yup.
So the real story here is how competitors will challenge this system
that is spiraling out of control.
Broadcasters DO NOT provide a viable option - they simply do not
offer the content that most people watch most of the time over a 24
hour day.
Cable and DBS TV bills keep rising because of the subscriber fee
issue; if the Internet can offer a viable ala carte alternative the
whole house of cards that is TV distribution could collapse.
Did I mention that wired telco subscriber lines are is serious decline too.
Technolog has a way of changing the competitive playing field.
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