At 2:26 PM -0500 11/15/04, Manfredi, Albert E wrote: >Yup, and what's more, there's no question in this case >of "separating content and carriage" as being a viable >solution. There's not much content to speak of that >these giant RBOCs own on their networks. They grew >because they were more capable than their competition >at running gigantic networks at prices people were >willing to pay for the feature set they offer. It's a completely different business: common carrier versus a license to serve ONE market with broadcasts that may contain content the license holder produces AND any other content they wish to buy. What is important to this discussion is the fact that breaking up Ma Bell just created 3-4 regional monopolies instead of one national monopoly. The markets for cellular were SUPPOSED to be open to new incumbents, and a few did manage to survive. In order to create "competition" the government rules on spectrum auctions were designed to PREVENT the RBOCs from dominating this new business. In some of the auctions they were prohibited from bidding on the available spectrum. Unfortunately they took a cue from the politicians with "Campaign Finance Reform" and just did an end run around the legislation. They created and funded legal entities to bid in these auctions, then took control of the spectrum that these companies "won." And now,consolidation is bringing most of the remaining competitors into the fold. So I don't buy the idea that they were more capable competitors. They used their financial resources and political clout to dominate this emerging market. > > Just decouple content and carriage, > >I don't think that's the answer. The media giants >would still be media giants, even if they didn't >own their 39 percent "reach" OTA infrastructure >(which you claim no one uses anyway), and even if >they didn't own any of the cable systems. Let's analyze this. First, they now reach virtually 100% of the national audience with their content, and as I suggested, they would continue to do so if they were prohibited from owning distribution to the consumer. The 39% national cap has NOTHING to do with reach. It is a measure of ownership of distribution of their programs. You can think of it this way: If the networks were prohibited from owning broadcast stations, they would still capture the revenues from their network operations. I don't know the exact numbers, but I think this is roughly half of the 15 billion they now derive from network operations AND the revenues from their O&O stations. These stations would become independent if content and carriage were separated, and presumably the revenues would stay in the markets where they are derived (unless of course the deal allows "distribution conglomerates" to own broadcast licenses that reach some government mandated cap). On the other hand, If the caps are raised or eliminated, the Networks will buy even more stations to capture the revenues they control. The downside risk here is that with total control over broadcast distribution, the networks could then put the squeeze on cable and DBS, sucking out the remaining profits from those businesses. I can't think of any upside benefit for consumers. And I have never claimed that "no one uses" the OTA infrastructure. We have recently discussed the fact that somewhere between 15 and 18 percent of U.S. homes still rely these broadcasts. But 85% get their network fix via cable or DBS, NOT an OTA broadcaster. That being said, the revenues generated by OTA broadcasting are NOT shared with the cable and DBS systems that carry these signals. In fact the cable and DBS systems ship money to the networks in the form of subscription fees for the OTHER channels the networks own, and in kind compensation via carriage of other network content. Back in the good old days, when networks could own only seven stations, broadcasters had enough clout to balance the power of the networks. The FinSyn rules that Turner talked about were equally important, as they put a cap on how much of the content carried by stations the networks could own. In other words, stations had no choice but to buy some of their content from companies NOT OWNED by the networks. But hose days are history. With control of 90% of the content we watch, and roughly 40% of the revenues from OTA broadcasting , stations are now at the mercy of the networks. They have little if any negotiating power, and they are being squeezed at every opportunity by the networks. Prohibiting the networks from owning ANY form of distribution (except perhaps for direct-to-consumer via DVD or broadband) would largely correct the imbalance. Then again, if the networks then refused to deliver their content via OTA broadcasting, how long would local stations remain economically viable? >They grew into giants because they either created >or they bought the content that people enjoy >watching. The content, more than the physical >infrastructure, made the Viacoms and Disneys the >giants they are. Hardly. It has been the combination of content and control over distribution that has allowed them to become what they are, AND a generous portion of help from the politicians, with whom (and for whom) they have built their empires. This is the dirty little secret that you keep ignoring Bert. The government has granted these lucrative franchises because the politicians ALSO benefit from the ability to control the flow of information by allowing a few companies to dominate. >Just as in the telecom case, separating content >from carriage would accomplish nothing, I think the >same applies to the media (content) giants. There IS no Telecom case Bert. They have never been in the content business; they are in the business of providing connections. Exclusivity in distribution is, and will continue to be an important means by which the value of content can be inflated. We just saw a real world example in the new rights deals that the NFL just cut. DirecTV paid a huge premium to remain the exclusive distribution platform for NFL Prime Ticket. Dish wants that content; every cable system wants that content. Even broadcasters would love to carry more games. But the rules are carefully constructed to protect the NFL, giving them the ability to maximize revenues while MINIMIZING distribution. Local broadcasters in NFL markets can't broadcast a game unless it is sold out. And they cannot carry competing games when the local team is playing at home. This creates the demand for the national NFL Prime Ticket subscription. If the other DBS service and cable systems could offer the same content the price of a subscription would tumble thanks to competition. In a world where content and carriage are decoupled, everyone would be able to get that content at fair market prices. This IS, after all, what enabled DBS. Before the government stepped in and forced the content moguls to sell their networks to DBS services at essentially the same price that cable pays, DBS could not get off the ground. One more thing Bert. Why did OnDigital fail. The direct economic reason BERT? Not the competitive reasons. I'll help. They paid too much for content - specifically the rights to a UK Football League - and could not remain solvent. They bet the farm on one exclusive content franchise...and lost. Regards Craig ---------------------------------------------------------------------- You can UNSUBSCRIBE from the OpenDTV list in two ways: - Using the UNSUBSCRIBE command in your user configuration settings at FreeLists.org - By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word unsubscribe in the subject line.