[opendtv] Re: Apple's online TV proposal stirs interest from broadcast networks
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Tue, 5 Jan 2010 10:12:59 -0500
At 2:14 PM -0600 1/4/10, Manfredi, Albert E wrote:
I would be amazed if exactly the same thing were not true for the
MVPDs. I'll bet that subsription fees alone cannot cover their
costs, so that in times of day when their ads aren't pulling their
weight, MVPDs also lose money. And I'll bet there are multiple
program streams on MVPD nets that lose money all day long, and are
merely subsidized by the lucrative streams.
So, no difference there that I can see.
Only because you do not watch...
the MVPDs.
Cable networks have significantly higher day part ratings than broadcast.
And then there is the old cliche' that "no one is so blind as those
who do not see..."
You stated the obvious difference between the cable nets and
broadcast above. Subscriber fees make it possible to develop content
that is offered with multiple access points to fill out the 24/7
program schedule. It costs the cable networks next to nothing to run
the same program multiple times; this is NOT TRUE for broadcasters
who must pay (or be paid by selling infomercials) to fill up their
schedules.
Even in MVPD land shows must carry their own weight. To be certain,
ad rates are higher when more people are watching (especially for the
cable news nets). But ad costs for ads run by a cable network are
calculated on the total number of viewers over all day parts; the
MVPD also inserts ads into these shows, and the rates may reflect the
time of day, although most cable ads are sold as run of schedule
rotations. And then there is the reality that multiple access points
make it easier to capture a program on you DVR if you tune in late or
hear that an episode is good from a friend - the time of broadcast is
irrelevant when a program is recorded to a DVR.
Here's a reality check.
http://www.tvb.org/nav/build_frameset.aspx
For the week ending December 20, it shows that 91 of the top 100
programs watched in the US are also available FOTA, and are from the
major TV networks. And these beat out the subscription-only shows by
a considerable margin. Furthermore, one of those 9 which are
supposedly only subscription shows is actually nothing more than
reruns of NCIS, also available on FOTA stations.
And this tells you what?
That high budget shows still can draw larger audiences.
But did these shows turn a profit?
This merely confirms your lack of vision above.
Broacaster ad revenues are down - A BUNCH!
MVPD ad revenues are up.
Advertizers can't be blind, can they? Fractured audience or not,
people still flock to these shows that you claim no one is watching.
Advertisers pay for audiences in terms of CPM (cost per thousand).
The CPM for the highly rated shows is VERY HIGH, but on the decline.
Advertisers also value frequency and reach - the ability to deliver a
message to you multiple times for reenforcement or to reach viewers
that tune into the same program at different times. MVPDs focus on
this way of accumulating audiences and ad views, which is a major
reason why money is leaving broadcasting and moving to the MVPDs.
The reason why Fox and others can make demands of the MVPDs is so
simple. When 85 percent or more of US households subscribe to MVPDs,
and when the shows from the major congloms are as desirable as they
are, the congloms call the shots. The MVPD nets would lose lots of
viewership if they didn't carry the shows, EVEN THOUGH those same
programs are availablew FOTA. That's capitalism at work. Inelastic
demand creates high prices.
Yup. Fox and the rest of the congloms are right up there with ESPN,
that pulls in nearly 40 billion in subscriber fees before the first
ad dollar is counted.
The moral of this story is that high value content can attract large
audiences, albeit at a large cost.
This is a major reason that the broadcast nets used to spend more
than a program an make in revenues to build ratings, especially for
adjacent programs. And it is also a major reason why the broadcast
nets are filling up their schedules with cheap throw away content
that does not produce large audiences, but DOES produce a profit.
Regards
Craig
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