[opendtv] Re: Bob likes COFDM

  • From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
  • To: "OpenDTV (E-mail)" <opendtv@xxxxxxxxxxxxx>
  • Date: Sun, 27 Mar 2005 18:11:02 -0500

Craig Birkmaier wrote:

> Not exactly. Most of the ad revenues go to the
> conglomerates now. There are slots for local ad
> insertion into these cable channels, but that
> revenue goes to the cable or DBS system, or in
> your scenario, to the local affiliate. No net
> gain for the congloms there.

Then I don't understand why the conglomerates
continue to create highly desirable prime time
content that they air FTA. If it's true that the
cable-only shows generate more revenue for the
conglomerates than these FTA shows, one would
expect the conglomerates to create their best
content to be cable-only or DBS-only. But they
obviously don't. Some very good new shows have
been introduced this year, FTA.

> But a potentially huge net loss. The cable
> companies will liekely either dupm these channels
> if broadcasters start to carry them, or at the
> very least, refuse to pay subscriber fees. This
> represents a potentially large loss of revenue
> for the conglomerates.

The cable and DBS companies won't dump the content
that their subscribers want to see, obviously, but
certainly their deals would have to be renegotiated.
My hypothesis here is that with DTT multiplexes, the
conglomerates are able to make more of their content
fit the model of the current FTA prime time lineup.
And that this is a good deal for the conglomerates.

> > Seems to me that the rest of the business world
> > is full of different sorts of redistribution
> > arrangements.

> Do you mean the world of free markets?
> The conglomerates do not operate in free markets.
> They have tremendous leverage because of
> techno-political gerrymandering. If local
> broadcastters decide to use the spectrum to compete
> with cable and DBS, the conglomerateas will lose
> this leverage and likely be forced to start paying
> for distribution, rather than greenmailing their
> distributors to raise profits.

All I'm saying is that you can have a Burger King
franchise and a Wendy's franchise chain, each one
exclusive to its own brand, and yet they can and do
compete very effectively. The reason being, nothing
prevents two such franchise stores from operating
over the same medium (e.g. strip mall). And at the
same time, you can also have a mom and pop operation
open up a local-only store and compete with these
two giants, in that same strip mall.

With OTA TV and the FCC local ownership cap rules,
this same model works for OTA TV.

The reason the conglomerates won't easily lose any
leverage they have is very simple: they create the
best hamburgers. And that's what people want. As
long as they continue to create the best hamburgers,
they don't have a lot to worry about.

To compete against cable and DBS, all you need to do
is provide those same prime time quality TV shows,
but more of them OTA. Cable and DBS will still win
more viewership, because most people can't say no to
"more," but the percentages will probably shift

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