[opendtv] Re: FCC on cable ownership caps

At 6:24 PM -0400 8/30/09, Manfredi, Albert E wrote:
Of course, Craig. That's the whole point. And it goes even further.

What's good for the goose is good for the gander. If the argument for
MVPDs was that there's plenty of competition from other sources of news
and info, i.e. the Internet, then that excuse applies doubly to OTA
station ownership.

WHY?

This is not about competition; at least competition based on the current use of the broadcast spectrum. it is about access to a valuable spectrum resource at bargain basement prices, while other spectrum users are paying through the nose for access.

Allowing ANY entity to buy up a nation TV spectrum footprint "could" create a competitive threat to the MPVDs and the media conglomerates, although the real issue is program rights fees, not distribution. That is, even if Sinclair or some other entity could get a national footprint, they would probably have to create their own content, as they would ALSO have to compete for the most desirable content.

It should be obvious that subscriber fees are a MAJOR factor in the shift of content from OTA to MPVD. These fees have allowed the conglomerates to push up the cost of rights fees to the point that any FREE OTA service would not be able to compete.

In short, the media conglomerates are VERY HAPPY with the shift to MPVDs, a major reason why they are moving away from OTA broadcasting.

Likewise, they are happy to see the demise of newspapers, and have little reason to support TV/newspaper cross ownership, which might allow some of these dinosaurs to survive a bit longer.

And the politicians would be only too happy to see TV broadcasting marginalized, so they can recover more spectrum and sell it to the telco oligopoly.

So while I agree that the historic reasons that TV ownership was limited may no longer be valid, any new competition could upset the "harmony" between the MPVD and media conglomerate oligopolies, that has resulted in the U.S. consumer paying billions annually to watch advertiser supported TV programming.


Where I live, for example, the cable companies operating in my county
and neighboring ones are only TWO: Compcast or Cox. And worse than that,
each cable household can only connect to one of them.

Yup. There are too many levels of government that currently enjoy a piece of the action. Local franchise fees, a variety of State and Federal taxes. And the politicians love the leverage they can obtain by regulating monopolies and oligopolies.


Compare this with OTA households. Even if a TV network (or other
company, such as Sinclair) is allowed to cover 100 percent of the nation
with its OTA signals, local ownership caps, already in place, prevent
that company from having anything approaching the monopoly of MVPDs.
They cannot ever be the only OTA pipe into homes, like cable and DBS
almost always are.

Exactly. Broadcasters have painted themselves into a corner and cannot get out. And with rapidly declining revenues - a 26.3% year over year drop* - the future does not look too bright

* http://email.broadcastingcable.com/cgi-bin2/DM/y/hBI5U0GcHoT0Olt0D7nZ0Ep&rid=5250536
Broadcast TV Revs Down 12.8%

I think the FCC is right in granting leniency to cable ownership caps,
given the plethora of options out there today, from DBS, from the
Internet, from cell phone companies, etc. SAME APPLIES TO OTA, though,
and then some.

The options are still limited. DBS follows the lead of cable and must pay the same subscriber fees. Competition is mostly an illusion. And while the Internet has the potential to be disruptive, the conglomerates have created enough FUD to control the evolution of the Internet as a TV distribution medium. Ultimately, the conglomerates probably hope that they can cut out the MPVDs AND OTA broadcasting as they move to Internet distribution.

A few years ago, the broadcast networks and the local broadcasters split the billions in ad revenues about 50/50. According to the article above, in the last quarter local broadcasters brought in $2.7 billion (some of which goes to the conglomerates via their O&O stations), while the broadcast networks brought in $5.86 billion. And this does take into consideration the huge imbalance in subscriber fee revenues.

Bottom line, the politicians love to limit competition to a few players that they can control and use to further their goals.

Even more reason why there's no longer any excuse for national ownership
caps. Besides which, one of the reasons why certain conglomerates lose
interest in their OTA pipe is that they cannot control it enough to make
it worth their while. Wasn't it Viacom that complained about this? They
don't control the makeup of the multicasts, nationwide, enough to make a
compelling nationwide package.

You are beginning to get warm...


Here's what I truly do believe, and why I find your arguments so
contradictory. This quote is from the article you posted:

http://www.tvnewscheck.com/articles/2009/08/28/daily.5/?page=1

"[...] Although they may not admit it, the FCC and FTC efforts may
spring from the guilt liberal Democrats must feel for perpetuating
ownership restrictions that have hobbled newspapers and broadcasters in
their ability to respond to marketplace pressures. The Dems might feel
kind of stupid, too, if the newspaper-broadcast crossownership ban
outlives newspapers. [...]"

The key word here is "might." Trust me, they do not feel stupid - they are very happy to see competition minimized as legacy media die.


Your comments on "saving broadcast jobs" and your support of ownership
caps for OTA networks or other OTA companies are inconsistent, as far as
I can tell, with all your other political beliefs. Also inconsistent
with your approval for removing ownership caps from monopolistic
umbillicals.

I am not in favor of removing the ownership caps on the MPVDs. And frankly, I am not uncomfortable with the demise of local broadcasting. Things like this give me reason for hope:

http://www.nytimes.com/2009/08/31/technology/start-ups/31fwix.html?th&emc=th

All a Cub Reporter Needs Is a Scoop and an iPhone


The last part of the article warns broadcasters not to ask the FCC for
special favors. I AGREE wholeheartedly. If the courts managed to
understand and reverse the FCC ownership cap on cable systems, why would
the courts not use that same logic for OTA companies?

No. They have consistently struck down FCC efforts to raise the caps and to allow TV/Newspaper cross ownership.

Craig Birkmaier wrote:

 One need only look at what has happened to radio when ownership caps
 were removed - a significant loss of jobs and diversity of delivered
 product.

I forgot to address this specifically.

Radio survives, more or less. That's what happened.

Radio is ALSO in decline - except for Talk radio. And the radio congloms are beginning to break apart their own collections of stations.

You're making the argument for saving the mom and pop grocery store, or
the mom and pop bookseller. It's not "wrong" per se, but it is quite
"leftie."

I am not making the argument for this, just parroting the argument used by the FCC against further consolidation. The jobs are going away anyway as revenues decline.

Like it or not, to survive in this dog eat dog economic system of ours,
you need to leverage economies of scale. If you can't do that, your
operating costs go up and you become uncompetitive. So, advocate mom and
pop stores, and then you're left baffled when everyone shops at WalMart,
Barnes and Noble, or Giant Food.

If only we really had a dog-eat-dog economic system anymore...

Clearly the politicians want to control the economy, and it is easier to do this with fewer companies to control.

It's all about buying power. Advertizers will find FOTA media more
attractive if their hard negotiations achieve nationwide coverage.

Advertisers are looking for ways to reach targeted demographics and increasingly to reach individual consumers. Cox cable in Gainesville is now offering neighborhood level ads for small businesses that do not need or want to reach the entire (relatively small) city of Gainesville.

National advertising is only effective for a small percentage of companies and products, and even here, revenues are down.

Regards
Craig


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