[opendtv] Re: 247wallst.com: Pay TV Shows Troubling Subscriber Trends

  • From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Fri, 19 Sep 2014 09:59:51 -0400

On Sep 18, 2014, at 9:45 PM, "Manfredi, Albert E" 
<albert.e.manfredi@xxxxxxxxxx> wrote:
> Craig Birkmaier wrote:
>> Look at how long broadcasters have held on in the face of a massive
>> decline in their audience Bert.
> That's potentially a point. But I can't tell if you're talking about 
> broadcasters or about the congloms.

Broadcasters are an MVPD competitor that get their content from the content 
conglomerates. The audience that watches the broadcast networks has declined 
steadily since cable systems started offering competition in the '80s. But they 
still serve a purpose. Especially now that the stations and networks are 
generating billions in retrans consent fees. 

The content conglomerates diversified in the '90s, creating second tier cable 
networks, news channels, and buying up any cable network willing to sell. They 
still own the vast majority of the programming we watch - the audience is just 
spread out among MANY options (streaming channels and new VOD services).

> The congloms are creating most of the TV content that people care about, 
> whether or not it is transmitted OTA. So no problem there.
> The OTA broadcasters, whose basic distribution function has been taken over 
> largely by MVPDs, have gone to big station groups (cutting overhead costs), 
> and have gotten that strange deal from the FCC, retrains consent. That's what 
> has kept them going. In principle, I think that *if* the OTA broadcasters got 
> MVPD carriage *and* all of the ad revenue from their ads, they could still 
> have survived. Even without retrains consent.

You just made my point. The second revenue stream from "the bundle" has propped 
up OTA broadcasters. In fact it is almost comical that we still call them OTA 
broadcasters, as such a small portion of the audience uses an antenna. 
Broadcasters have a strong incentive to promote subscribing to the bundle. 
> So until now, those two effects have kept them afloat. In the Internet era, I 
> think they will need to show how they add value to Internet distribution, 
> because I think the retrains consent formula, which only works with MVPD 
> bundles, ain't going to last forever.

Time will tell. I think many broadcasters will survive the next consolidation, 
while the ones on the margins will take the spectrum auction money and run. 
Local news is still their most important franchise, and it is likely that at 
least one TV news organization will survive in every market, just a one 
newspaper had survived in each market. If Newspaper/TV cross ownership is 
allowed ( and I think this may be inevitable) we may see only one "news 
organization" in many markets.

The largest problem local broadcasters face is finding or creating original 
content people will actually watch. They know little about the production of 
dramas and sitcoms. Live local sports may be an option, like high school 

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