[opendtv] Re: Broadcasters, Cable Spar over Retrans

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Thu, 16 Jun 2011 08:38:00 -0400

At 3:39 PM -0500 6/15/11, Manfredi, Albert E wrote:

Craig Birkmaier wrote:


 The issue here is retransmission consent, a legislated requirement

 > that ONLY applies to broadcasters.
Retransmission consent does not force MVPDs to send that channel to every subscriber. It merely says that the MVPDs have to agree with the local broadcaster on terms to allow the MVPD to carry the content. And anything that constitutes terms of an agreement is fair game, be that placement of the channel or kickbacks from the subscription fee, as far as I'm concerned. 

Uhhhhhh...

Not exactly.
If a broadcaster elects must carry, the cable company must make the channel available to ALL subscribers. This is why you find that the lifeline or basic tiers carry all the broadcasters in the market and only a handful of cable networks.
I suppose that broadcasters "could" negotiate a contract that only delivers their signal to certain paid tiers, but this makes little sense, since it would reduce the number of homes paying the subscriber fee. Because they have a national footprint, the DBS companies are not required to deliver local broadcast signals to subscribers; instead, they offer local channels packages that cover the subscriber fee costs for all of the channels in the package (and a bit more for them). ,
I seriously doubt we will ever see the cable companies offer a local broadcaster tier like the DBS companies, as this could cause many subscribers to put up an antenna, rather than paying say $5 per month or more. By including broadcasters in the lifeline and extended basic bundles, the customer is still paying the same amount, but they cannot opt out, even if they do put up an antenna.
None of this diminishes the fact that MVPDs have a simple strategy they can use, to keep the cost self-regulating. It requires nothing from the FCC, or from Congress, for the MVPDs to allow natural market controls to work. We don't need ANY new government mandates to keep MVPD prices in check, Craig.
I agree. Let's get the government out of the business of regulating content through the back door of regulating the "pipes." But this would not solve the problem. It would take massive litigation to break up the oligopolies under anti-trust laws.
The best hope today is that some new player - like Apple of Google - can put enough cash into the game to license the content now delivered by the MVPDs, then offer it on an ala carte basis.
It worked for music, where it is now easy to buy just the song you want, without paying for the "bundle" (CD).
For homes like ours that do not consume a lot of TV content, we could probably save some money, even if the cost per channel we want is higher. I expect, however, that Apple will offer an affordable subscription bundle ala Netflix, and the ability to buy individual first run program packages rather than "channels." For example, if you like the CSI franchise, you could pay $5 a month for first run access and access to the entire library of programs. 




 THERE WAS NO NEED to withhold content for non broadcast networks -
 they were already getting subscriber fees. You mention the HGTV/Food
 Network flap. There are two interesting facts here.
But Scripps DID withhold their content, as I recall, and even transmitted it FOTA for a period.
Yes, they behaved like the broadcast networks in this respect, I would point out that they only broadcast the one show that people were complaining about losing, not the entire channel 24/7.
What this suggests is that consumer may elect to pay for the stuff they really want, IF they do not need to pay for all the stuff they do not want.
That was my point. Even though this non-network dispute was unusual, it ended up being no different from the much, much more common network TV disputes. The content owner sees that his content is being sold at too low a price, compared with other competing channels, and this content owner demands more. Totally predictable, and highly controllable by any MVPD, if the MVPD goes to more a la carte.
What you are suggesting is that the marketplace works here; that a specific network can use their popularity to get a higher fee. This is largely true, except for one minor detail. It only works because the fees are relatively small, and EVERYONE pays them, even if they don't want the channel.
With ala carte, only the people who want the channel would pay - the MVPDs argue that this would cause the cost of the channels you want to go up (a lot) since far fewer people would be paying and they assume that the network would want to get the same amount or more in total subscriber fees for a channel. My argument is that with ala carte the networks would drop the subscriber fees and keep their channels available to all subscribers, rather than risking losing their audience. 

I don't know who is right, but I'm sticking to my position.
Which is silly. Unless the FCC establishes strict neutrality mandates, which I assume you oppose, there's no reason in the world to believe that that ISPs would behave any differently from MVPDs. 

Sure there is.
You have a choice in ISPs. If one tried to restrict your access you could choose another. It is fairly well established that Internet distribution is moving to a "common carrier" model, perhaps with a tiered rate system based on usage rates. This is something that both the telcos and the MVPDs fear, but there is little they can do about it.
The competition will come at the application and content layer, where the congloms will learn how to compete with their former program suppliers in something that resembles a real marketplace. This is exactl what is happening to the music industry, where self distribution and new indie labels are undermining the value of the labels, which are now viewed as the middlemen raking off the vast majority of the revenues.
The following discussion is from the comments to an article talking about how much money Apple is paying the music industry, content owners and app developers: 

http://www.asymco.com/2011/06/15/the-app-industry-vs-the-music-industry/
20 years is a very long time. I have to wonder how much longer the music industry will exist in its present form. Already the companies that make up the industry are in a state of distress and are not investment grade. 

Reply

Ian
· 12 hours ago
Agree. The music industry should do away with the middlemen who are not rewarding the artists the way they should be rewarded. The result is a definite drop in the quality, quantity and value of the good consumed. This will in the end result in the demise of the industry as a whole. 

Reply
57p
· 2 hours ago
The music industry ARE the "middlemen who are not rewarding the artists...". They will not do away with themselves. ITunes has some chance to do so, if indie artists who publish directly to iTunes are awarded proper money. Without the music industry middlemen there could be less trash that only exists because it is promoted by big money, and more quality music that exists because people actually like to listen to it. 

But it is going to take a looong time.
The key to all of this is the ability for content creators to bypass the oligopolies that now control access to the mass markets. The Internet is the disintermediating technology that is forcing the oligopolies to re-evaluate their future. 

Regards
Craig


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