[opendtv] Re: News: Disney Open to Basic-Cable-Network Buys
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Thu, 29 May 2008 22:15:04 -0400
At 6:06 PM -0400 5/29/08, Manfredi, Albert E wrote:
I'm trying to parse this. The article seems to mix two different topics.
Not really. You may be trying to make two topics out of it - it is
clear that you are confusing some terminology.
It looks like Disney is going after ownership of as many "content
streams" that have national coverage as it can afford. Such as ESPN,
A&E, Lifetime, and so on. And it already owns the ABC content that has
national coverage, within the limits imposed on hours of the day by the
FCC.
To start with, what is a content stream? None of the cable networks
you mentioned are content streams.
ESPN licenses content from college and professional sports franchises.
A&E and Lifetime do create some of the shows they air, but they
licenses a large portion as well.
ABC and Disney are the main content generators.
What Disney Corp is looking for in cable is distribution - places
they can provie access to the content that they create. The fact that
they are not interested in The Weather Channel should have provided a
clue...
The Weather Channel is all content - but it is not the kind of
content that keeps people tuned to that channel, EXCEPT on the rare
occasions when there is a weather emergency. TWC operates much like
the cable news networks: they plod along with minimal audiences until
a major news/weather event happens. When this happens their ad rates
go up dramatically as this is when large numbers of people watch them.
What Disney wants from cable is to control a significant number of
basic tier channels so that they can accumulate audiences that have
left the broadcast networks. They want distribution, as this provides
more outlets and "viewing windows" for off-network shows before they
go into syndication. They also want to control the ad inventory,
something they can;t do with a broadcast affiliate distribution
system that take up to half of the revenues from broadcast operations.
"He said Disney looks at every basic-cable network that is up for sale,
'but if we were to step up [to buy], it would be with great caution. We
are fairly rigorous.'"
So much for content.
Not content. They look for distribution.
Then comes the subject of distribution media. It looks like Disney is
not trying hard to buy into that:
Wrong again.
"There's little Disney interest in buying more TV stations to augment
ABC, given that broadcast-TV growth prospects are cloudy and its
existing 10 owned-and-operated stations are "solid," Iger said, adding
that Disney won't be a seller, either."
The question I have is, how would the picture change if (a) Disney did
not have to see the 39 percent national cap to limit their growth, and
(b) they considered clever *nationwide* use of their new OTA multicast
capacity? Wouldn't that change rather dramatically the "growth prospects
are cloudy" concern they have?
No.
Broadcast television is dying. There are too many liabilities in
using broadcast for distribution. You mentioned the ownership cap,
which does influence how much of the total broadcast revenue pie they
can eat. But broadcast carries with it FCC content control (and
fines) - this limits what they can produce in terms of content. Cable
does not have these content restrictions.
Most important, however, is that the audience has given up on OTA and
moved to cable and DBS. That's why Disney wants basic cable channels.
The reason they want to hang onto their ten stations should be
obvious. The same reason that NBC is creating a news channel in New
York. These markets are huge, and their brand has value that can be
built around, even if OTA goes away completely.
You will never see the day when the networks try to build a national
broadcast footprint. They are multi-channel today and will move to
direct Internet distribution as the bandwidth becomes available and
people move to ala carte purchasing of their entertainment fixes.
This sounds similar to the NBC "rebranding" stuff we saw recently. What
these two conglomerates are after is 24/7 content streams that achieve
national coverage. My guess is that if they could also acquire a
distrbution medium with 24/7 national coverage for some of this content,
they might show more interest.
You are on the right track here, despite the fact that you have the
terms backwards.
They are looking for national distribution to proliferate the content
they create. people do not watch content streams - there is no
Everybody Loves Raymond or Friends channel. In a distribution
environment where people pick up the remote every time a commercial
comes on, they want to have a chance to be the channel you switch to.
Disney only has 10 O&Os? Wow. If they aren't interested in owning a
potential nationwide distribution OTA plant, I'll bet someone else would
be.
Can you name anyone?
Not likely. IT is far to easy to set up nationwide cable networks
that do not have the restrictions and liabilities of OTA broadcasting.
Regards
Craig
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