Round numbers (if I am off base, please stop me!)...some $30B flows
in the MVPD arena for cost of programming. Based on whose numbers
you believe (NEWS FLASH! Nielsen TV Diary-Only Ratings Lose MRC
Accreditation - 154 markets!), some 40-45% of television viewing is
local television! Less than 3% of the revenues that flow to
programmers comes to Broadcasters! Retrans negotiations are trying
to give "balance" to a situation that can be blamed on the
governments (FCC) practices of the 80's that allowed cable companies
to prosper without any means for local broadcasters to get
KEEP THE GOVERNMENT OUT OF THE FREE MARKET!
On 11/22/2010 7:37 AM, Craig Birkmaier wrote:
At 5:31 PM -0500 11/21/10, Albert Manfredi wrote:
Seems to me, what you are describing is
that the increased cable fees were caused mostly by the need to
populate the much greater channel capacity cable system
acquired, over the years. So it's not fair to say the cause is
retrans consent for the FOTA programming, even though it might
be an indirect cause.
There is certainly a case to be made - and the cable industry does
make this case - that the cost per channel delivered to
subscribers has remained relatively constant over the years. This
was certainly true in the '90s and into the next decade as the
number of channels in the expanded basic tier expanded. Now,
however, the cost per channel is increasing as the expanded basic
tiers are not expanding, but prices continue to grow at rates
faster than inflation.
One must look at the combined impact of the options that
broadcasters can elect to obtain cable carriage - Must Carry AND
Retransmission Consent - which were addressed in the 1992 Cable
Television Consumer Protection and Competition Act of 1992.
In two "narrow" decisions in the '90s, the Supreme Court upheld
Must Carry, which requires cable systems to reserve up to 30
percent of their capacity for the carriage of local broadcast
If a station does not have content that is perceived to be of
significant value by cable subscribers they typically elect Must
Carry. In the second Supremem Court decision:
Justice Kennedy's opinion for a divided Court reiterated the
constitutionality of the "must-carry" provision. Kennedy noted
that the provision had the considerable benefit of preserving free
over-the-air broadcasting, promoting the widespread dissemination
of information, and promoting fair competition in television
programming. Along with four of the other justices, Kennedy also
concluded that cable television had come to so dominate the market
that without some government support broadcast television might
The net result has been that anyone who can get a broadcast
license is guaranteed carriage on their local cable system, in
some cases, even if their signal cannot be received by the cable
subscribers in that market. Turner argued that this ties up system
capacity that the cable system could use for programming that
would otherwise be carried in a market driven system. This year
Cablevision asked the Supreme Court to revisit the Turner
If a station does have sufficient market power - i.e. content that
cable subscribers desire - they typically elect Retransmission
Consent, which allows them to demand compensation for their
signals. This alone would not give the comglomerates power over
the MVPDs, however, the government has allowed stations (and the
congloms behind them) to tie carriage of other channels in order
to carry the broadcast channel that is asking for compensation.
This has been used to gain preferred carriage of MANY new
NON-BROADCAST networks owned by the conglomerates. It is difficult
to demonstrate how this protects over-the-air broadcasting.
Personally I think that the government is simply providing cover
for two oligopolies to charge monopoly rents for a service that is
in high demand by consumers. If the government were truly
interested in protecting consumers they would take legal action to
bring to an end the practice of bundling to force consumers to pay
for content they do not watch.
And it is worth noting that even with Must Carry and
Retransmission Consent, broadcasting is still dying.
This may be the biggest argument to support my contention that
Retransmission Consent has been used as a weapon to prop up the
fortunes of the conglomerates. After arguing that the government
should protect FOTA Broadcasting in the Turner cases, these same
conglomerates used this weapon to develop non-broadcast networks,
and are now moving their most valuable content from the FOTA
services to the non-broadcast networks, while demanding a second
revenue stream for ALL of their networks.
Certainly this situation would not exist without government
regulation of what SHOULD BE a free and open marketplace.
And the other way to think of it, if 70
to 80 percent of daytime TV viewing is this "other" programming,
meaning what's not on FOTA channels, then one might conclude
that the material is actually being watched. So in fact, people
are paying more because they are watching more of this non-FOTA
material, which is only fair. No matter whether it's the same
congloms that create the stuff. (BTW, I don't count airport CNN
monitors as fair game.)
The time of day is irrelevant. Non-broadcast channels now draw the
largest aggregate audiences in all day parts when we look at
networks versus individual programs. I do not take issue with the
idea that people should pay for what they watch, although one can
make the case that the ads are sufficient payment; that dual
revenues streams ONLY EXIST because the government is propping up
two colluding oligopolies.
One need only look at Freeview, where these same content
oligopolies are PAYING for carriage, rather that demanding
It make no difference whether the networks I am watching are
available FOTA, since I stopped using that service decades ago.
The problem is that I am being forced to pay for both broadcast
and non-broadcast channels that I do not want. This is not
competition, it is using the strong arm of government to collect
Note that Dan even objects to the notion of paying subscription
fees for a network that carries many programs he does not want. He
(and I) would prefer to pay only for the programs we watch. The
problem is that in the absence of a real market with real
competition, the congloms can, and do, demand monopoly prices for
content that is already paid for with advertising.
IMHO, there is no "reasonable" rationale for charging $1.29 for a
song on iTunes. In a competitive marketplace the cost would be
pennies...25 to 50 cents at most. The same is true for TV shows -
probably even more true since we typically do not collect TV
programs and watch them over and over again. Yet a single episode
of a TV show on iTunes costs 99 cents for a 24 hour viewing
retrans consent is now used primarily
for the broadcast channels, but
in many cases the agreement still involve a bundle of
broadcast and non-broadcast.
True, it seems. Except that as you say, that non-OTA material is
being watched, especially during the day. If it were bundled and
not being watched, things might be different.
The extended basic tiers are filled with channels that are bundled
but not watched by most subscribers. This is true for both
broadcast and non-broadcast channels.
It is time for the government to step aside and let the
marketplace take over.
Broadcasters are offering more channels
than at any time in their
history. And still hardly anyone is watching.
I don't trust this FCC to tell us the truth on this subject,
Craig. They have an agenda which would not benefit from
revealing any increase in FOTA viewership. The other thing is,
the facts certainly prove that this OTA "infrastructure" is
plenty capable of supporting very decent OTA service, easily the
equal or better than anywhere else. So there's no doubt in my
mind that broadcasters can make very good use of it, if it
suited their purpose.
IF IT SUITED THEIR PURPOSE.
The purpose is to drive up the value of the spectrum at auction by
creating artificial scarcity where none exists. Without must carry
and retrans consent broadcasting would already be a historical
What we will not see is the equivalent of Freeview in this
country, as that is what the broadcast spectrum would be used for
if the marketplace decided what to do with this spectrum.
On the Internet TV service topic, a CE company that refuses to
get in bed with the congloms or with any single specialty
browser/search engine has options. My thinking is, you provide a
keyboard and mouse for the user to set up the system and to
create his bookmarks. Then you provide a smaller and simpler
remote control, which could have either up/down and left/right
arrows and the <enter> button, or perhaps a joystick and
<enter> button, or some such. Something along these lines.
So if the user only wants to watch Internet TV, most of the time
he'd only need the small remote.
A keyboard and mouse has no place in the family room. And the
mouse may be irrelevant in a few years as we move to touch based
interfaces, i.e. trackpads and touch screens.
I do agree that you could "program" your TV from a desktop
computer or any number of mobile devices.
The real issue here is turning the big screen in the family room
into a highly usable display for group activities. I certainly
hope there is a vibrant marketplace for products that will compete
to be seen on that screen and for the user interfaces that will
exist to interact with it.
My bet is that our mobile devices will become that user interface
and that we will be able to control what is on the big screen,
individually or collectively for group applications. What we do
not need is for government or industry imposed standards for the
interface to the big screen or the devices that will control it.
And we certainly do not need powerful oligopolies determining what
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