[opendtv] Re: News: Disney Open to Basic-Cable-Network Buys
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Mon, 2 Jun 2008 08:55:52 -0400
At 7:35 PM -0400 6/1/08, Manfredi, Albert E wrote:
Craig Birkmaier wrote:
To do that they would need to have at least 20 to 30 MHz
of spectrum in every market.
[ ... ]
Obviously this can be done - e.g. Freeview in the U.K.
US markets typically have at least as much spectrum available to them as
do the European systems, so I don't think this is a valid excuse. Most
of the Euro Freeview systems get 6 or 7 DTT multiplexes in any given
location. And often each with less capacity than US multiplexes, due to
the chosen modulation (lower spectral efficiency to keep transmitter
power down). Given the will on the part of the congloms, I don't see any
problem with offering that in most US TV markets.
Well for starters, we were talking about whether a network -
ABC/Disney - would be interested in a nationwide OTA network. Now we
are talking about 6-7 channels per market to build a "Freeview like"
system. These are very different things. I seriously doubt that the
Feds would let any single company own a nationwide footprint with 30
+ MHz of bandwidth. Just because it can be done does not mean that
the congloms want it to be done.
In fact, it would appear that just the opposite is true. THey do not
want to compete with the multi-channel services...they want to use
them to maximize THEIR OWN profits.
> And then there is the minor issue of building a billing
and customer service infrastructure, or make the service
free and lose all the subscriber fee revenues they now
collect from the multi-channel services.
From a conglom's point of view, all they should care about is net
$/eyeball-pair/program. The net income could certainly be higher for
programs the conglom transmits over an OTA network they own, than those
programs where they have to involve a MVPD. The only negative SHOULD BE
that the congloms can only fit so many programs over this OTA network.
So they will need MVPDs regardless, for some of their programs.
How could the income from OTA be higher than what they are making
with subscriber fees collected by the multi-channel services?
Remember, the retrans consent payments are on top of the revenues
from OTA operations (mostly advertising). ANd then they get to use
the same content to populate additional channels on the multi-channel
services, collection MORE subscriber fees.
The only way that the congloms could make more money is by owning the
multi-channel pipes as well, STILL CHARGING what we pay for
multi-channel services today.
ANd this is not the Freeview model.
MVPD systems have a much higher operating cost, due to the fleets of
trucks they need to deploy. This cannot be ignored, Craig.
Who is ignoring it?
I am paying about $70/mo for the extended basic analog tier and
access to digital cable - I get the HD tier. This also covers the
monthly fees for my Scientfic Atlanta HD PVR STB.
A portion of that $70 goes to the congloms, local broadcasters, and
the 10% of cable channels NOT OPERATED by the congloms. These are
the subscriber fees that the multi-channel services collect for
them.I do not know what the real numbers are, but lets assume that
the subscriber fees average about 50 cents per channel, so about $25
to $30 per month is passed along to pay for the content. That still
leaves about $40 per month for operation of the system and the MANY
taxes/franchise fees that are collected for the government.
The main reason that the multi-channel services do not care much
about the current system is that they can always blame the content
providers for increasing rates, even as they add a little on for
themselves.
If the content providers decided to use the OTA spectrum to compete
with the multi-channel services, they would have to cover the costs
of operating a customer service and billing infrastructure too.
UNLESS they made this a Freeview type service, which would not give
them the subscriber fee revenues they get today.It is unlikely that
ad revenues would make up for the difference.
Of course, this will never work if the OTA networks are handicapped with
feel-good propaganda like "localism" and national caps. I wonder if the
people you talked to at NAB considered the situation under a different
set of FCC rules.
You must realize that the congloms are not upset with the way things
are today, or where they are headed for that matter. They just want
to maintain control as the REAL digital transition takes place.
Their biggest risk is that we will stop buying form them if offered
good alternatives. THose alternatives now have a chance since they
can bypass the congloms and the multi-channel walled gardens.
And there is more good news. As the congloms migrate to
Internet distribution they will be challenged by small
independent producers who can also go direct to the
consumer, rather than being forced to distribute their
content through the existing gatekeepers.
This can happen right now. It's not an either/or, Craig. And Internet
distribution will affect a good OTA system less than it will affect more
fixed MVPD systems, like cable and DBS. But sure, in the future,
Internet distribution MAY get a much bigger role in this.
It is happening now, among early adopters who have good access to
bandwidth. But we still have a long way to go before we depend on
Google to see what we can watch, instead of some form of "TV Guide.
Regards
Craig
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