[opendtv] Re: Broadcasters Lobby FCC for Cross-Ownership and Duopolies

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Wed, 21 Jul 2010 08:53:01 -0400

Does Bert even have a clue?

At 4:32 PM -0500 7/20/10, Manfredi, Albert E wrote:
The difference is that the FCC will not allow a Sinclair to broadcast ANY content nationwide, as cable and DBS systems do routinely. The difference is also that a company like Sinclair cannot, for example, agree to broadcast HBO FOTA, with ads inserted, as they do for the very expensive network shows. They simply cannot go for that content. MVPDs have the exclusive.
This analogy is absurd. The ONLY national footprints for distribution of HBO are the two DBS systems. Cable systems that offer HBO are market based, just like TV stations. Sorry, Bert, but there are NO cable systems with a national footprint.
It is NOT a question of Sinclair agreeing to offer HBO content with commercials; this is simply absurd. The whole point of HBO is to watch premium content WITHOUT commercials. HBO competes with VOD, Starz and Showtime, and DVD sales and rentals, not advertiser supported content delivered either by MVPDs or broadcasters.
MVPDs do not have an exclusive on the content that HBO creates. HBO content is VERY POPULAR as DVD sales and rentals. As for the movies that form the core of HBO content., they are one of several distribution channels that the Hollywood studios use to generate revenue after theatrical release. This food chain begins with hospitality release - airlines and a few VOD services, then premium networks like HBO, then DVD sales and rentals, and finally advertiser supported via MVPD and broadcast.
Sinclair COULD create a movie service of their own using their spectrum. Disney already did this with MovieBeam. All they would need is a proprietary Set Top Box and a support division to sell, install and service these boxes and collect the monthly subscriber fees. This would not be a national footprint since Sinclair does not have stations in every market. But Sinclair could do as Disney did and lease capacity from other broadcasters, or the broadcast industry could work together to develop a platform with encryption and the necessary back channel to support transactions. The broadcasters in each market could provide a percentage of their spectrum and share in a proportionate portion of any profits.
So my point is, it's just not true that broadcasters of today create content, and should therefore be subjected to different rules from MVPDs. TWC is owned by a conglom, is it not? And therefore, if anything, is much more similar to the disappearing O&Os than it is to OTA station groups like Sinclair.
Not exactly. You are correct that TWC is a distribution play, although they do operate a few local news channels in Charlotte and Raleigh, NC; Austin, TX; Albany, NY; Syracuse, NY; Rochester, NY and New York City. This makes them very much like the network O&Os AND Sinclair in those markets.
But TWC is a thriving business, offering triple-play services to a large percentage of the TV viewers in the U.S. The following data about the top MVPDs may be useful here. The top five MVPDs are 

1 - Comcast Corporation -23,447,000 homes

2 - DirecTV - 18,660,000 homes

3 - Dish Network Corporation - 14,337,000 homes

4 - Time Warner Cable, Inc. - 12,817,000 homes

5 - Cox Communications, Inc.  - 5,100,000 homes
With 114 million U.S. TV homes, The highest reach fro any cable MSO is Comcast with just over 20% of U.S. homes. The broadcast network cap is around 39%.
Bottom line, however, is that it is not the rules under which each industry operates, but rather the business models that they can use that influence what they do. The broadcast industry has no way generate revenue other than advertising and retrans consent fees. Broadcasters COULD develop a new business model with a "platform" and the necessary infrastructure to compete with MVPDs, but nobody has figured out how to do this effectively, nor do they seem to care.
My educated guess as to the reasons why is that they are comfortable riding the broadcast ship down, thanks to the still very large profit margins for network affiliates, and the perception that TV distribution via MVPDs subscription packages is also reaching the saturation point with many consumers looking for more cost effective alternatives.
Good for them. This has nothing to do with the Dan's points, though. We are talking about why the FCC regulates the OTA station groups more than the MVPDs, as if station groups create all their content and MVPDs create no content. It's simply an archaic concept that needs to go.
The FCC ONLY has the authority to regulate the stations it licenses. They cannot regulate the broadcast networks per se. They can regulate the percentage of the overall market that ANY station group can reach, and they can regulate obscenity, although this may be in question thanks to the recent Appeals Court ruling on obscenity.
The FCC has NO authority to regulate MVPDs, other than in the area of spurious emissions from the wired cable plants, and licensing of the DBS spectrum. 


 > Only a few smaller stations have been sold by the networks. They are all

 near their national caps.
Huh? I thought the only network close to its cap was NBC, and they are selling off to Comcast. I thought that ABC and CBS have already announced that they're getting rid of their stations. 

WRONG.

Look at -  O&O stations of the four major networks in the United States

Here: http://en.wikipedia.org/wiki/User:Hinto/US_O&Os
And Comcast is trying to form a joint venture with General Electric to take over operational control of NBC Universal. They have publicly stated that they WILL NOT sell the NBC O&O stations, nor will hey move key content franchises like Sunday Night Football and the Olympics from the NBC network to MVPD only distribution. And none of this is locked in stone yet. It is highly likely that IF the merger is approved there will be strings attached with respect to what they can do with NBC.
You're the one that keeps posting these articles, Craig. How do you suddenly forget? And never mind CW and MNT, who have very few, if any, O&Os, and yet their stations are subject to the same archaic restrictions. 

What did I forget Bert?
The caps apply to EVERYONE, not just the networks. They apply to station groups like Sinclair as well. Yo may not like these restrictions, but they exist. And you may think that removing them would revitalize the broadcast industry.
But the reality is that the broadcast industry is being milked for every dime it can produce until it becomes completely irrelevant. Or if you prefer, until the congloms can make more money by bypassing both broadcasting AND the MVPDs. 

Regards
Craig


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