[opendtv] Re: CBS Affiliates Board, Network Agree on All Access OTT Terms | Broadcasting & Cable

  • From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Sat, 21 Mar 2015 08:22:57 -0400

> On Mar 18, 2015, at 7:28 PM, Manfredi, Albert E 
> <albert.e.manfredi@xxxxxxxxxx> wrote:
> 
> Regards
> Craig
> 
> 
>> If the transmitters are turned off, what value do affiliates have
>> for CBS?
> 
> ??? What value do the affiliates have for CBS All Access, Craig? They provide 
> the local content and they are the source of the "live" streams to the ISPs. 
> In other words, they keep the same CBS presence online as CBS has OTA. As 
> opposed to something like Netflix, HBO, or HGTV, which are not 
> market-specific TV sources. (I don't know whether the broadcasters will also 
> be distributing video servers at edges of ISP nets, topologically speaking, 
> but that could be another role.)

Nice!

So now there is value in a market based system with affiliates.

For years you have argued against the market based broadcast system, suggesting 
we should move to national broadcast networks like those in Europe. Now you 
tell us that market based FOTA stations add value. Given that OTA transmitters 
are limited in their geographic reach, the market based system does make "some" 
sense. 

But you also argue for the geographically unbounded Internet, and tell me I 
should be able to get MVPD service from Comcast. You tell us that the content 
owners do not need geographically restricted middlemen, be they FOTA broadcast 
affiliates or geographically limited MVPDs. 

Now you argue for them. Is this just your typical get on the other side for the 
sake of argument, or have you changed your position?
> 
>> You are the one who keeps telling us they don't need middlemen -
>> especially middlemen that don't pay them for the content.
> 
> We don't need OBSOLETE middlemen, who add no value, of course. We need 
> middlemen relevant to the new technology. Why do I have to repeat the obvious?

So now FOTA broadcasters are relevant to the Internet. Interesting.
> 
>> But they ARE getting subscriber fees from more than 100 million
>> MVPD homes, and from CBS All Access NOW.
> 
> And they are losing some of these loyal, faithful, do-as-you're-told 
> subscribers, as we speak.

CBS gets no compensation for the FOTA affiliate audience. In fact it costs them 
money in ad avails that the network could sell. They only get a split of the 
subscriber fees from the MVPDs, and now from CBS All Access, which is 
specifically designed to attract the unfaithful cord cutters. 

> So, they could just become another subscription-only channel, of course. If 
> they do, they will know that other channels will replace them as bread and 
> butter everyone-has-access-to-them TV content sources.

There are only a handful of live streaming channels that "everyone" has access 
to Bert, and even these are moving to some form of subscription for live 
streams. If anything, the shift to the Internet appears to be limiting access:

The new Apple OTT service won't have NBC Universal content.
Sling does not have a network add on bundle yet.
Sony Vue does not have Disney content.
Hulu just purchased exclusive OTT rights to Empire.
Amazon, Netflix and HBO are investing heavily in exclusive content.

Suddenly the extended basic MVPD bundle is looking more attractive, if only for 
the fact that it does not require multiple overlapping subscriptions to get all 
the channels you want.

On the positive side of the argument for MVPD bundles is access to any network 
that wants carriage. The FCC program access rules require that a content owner 
offer their live streams to any MVPD that wants to license them. We have 
discussed the current FCC NPRM that seeks comments about extending the program 
access rules to Internet OTT services operating as Virtual MVPDs. I found this 
excerpt from an analyst at Seeking Alpha rather interesting:

> Some have pointed to recent Net Neutrality rules proposed by the FCC as the 
> reason. Actually, the Net Neutrality rules were probably not as important a 
> factor as the recent blog post by FCC Chairman Wheeler, which I wrote about 
> in Apple's New Television Opportunity. In the blog, Wheeler proposed a very 
> simple rules change not really related to Net Neutrality.
> 
> In the proposal, the rules regarding Multi-channel Video Programming 
> Distributors (MVPDs) would be made "technology neutral." Cable and satellite 
> video distributors are classified as MVPDs. Making the MVPD classification 
> "technology neutral" sounds like such an innocuous little change, but it has 
> huge consequences.
> 
> Under current FCC rules, content providers such as the TV and cable 
> "networks" cannot withhold content from any MVPD that wishes to distribute 
> that content, as long as the MVPD pays the appropriate licensing and 
> distribution fees to the content provider. It's a "level playing field" 
> requirement that is typically mandated by the FCC's legal charter.
> 
> In proposing the rules change, Wheeler specifically had in mind distribution 
> via the Internet rather than cable or satellite. The simple, innocuous rules 
> change that Wheeler proposed would make it impossible for content providers 
> to block Internet-based distribution of their content.
> 
Apparently many content owners are objecting to extending the program access 
rules to the Internet. Obviously we are seeing this play out in the new OTT 
services that do not offer "a level playing field." That is some of the major 
networks are not included.

Even as this is happening in the U.S., Canadian regulators are moving to force 
a form of Ala Carte - pick and pay TV - on their MVPD services. Slimmed down 
bundles like those from Sling and possibly Apple do not let the subscriber 
choose the channels they want; at best the base bundles can be optimized with 
add on mini bundles.

Buying programming on an ala carte basis via the Internet can be more 
expensive, if the live streams are even available. The only real improvement we 
can see at this point is that most of the Internet services do not require long 
term contracts. Thus you can subscribe to CBS All Access to binge watch CSI, or 
to view the NCAA tournament games if your local CBS station is carried, then 
drop the subscription. Or you can subscribe to Sling in August to watch 
football on ESPN, then drop the subscription in January after football season.

All of this is sub optimal, consumer unfriendly, and potentially more expensive 
than that extended basic MVPD subscription. What we really need is a pay per 
view system not unlike what is happening in the music industry. The streaming 
music services pay small royalties for each song they deliver to the person at 
the other end of the stream.

TV could evolve in the same direction based on one very important metric - data.

Yesterday I posted a story stating that Apple was making progress in its 
negotiations with content owners based on the sharing of viewer data. This is 
real time, accurate program ratings data; it could also be used as the basis 
for paying for the program's we watch, or for a barter system where an 
advertiser would pay the program fee if the viewer agreed to watch a targeted 
ad.

Unfortunately, it looks like we may be entering a new era where exclusivity is 
used to sell subscriptions to OTT services, potentially making TV even more 
expensive. 

As the Seeking Alpha analyst noted, Net Neutrality is not the issue/problem. 
You will be able to subscribe to any service. The negotiations between the 
content owners and OTT services is where "neutrality" will end. 

This is not all that different than today. Bert chooses not to subscribe to a 
MVPD service and thus has no (or very limited) access to tons of popular 
content. I choose not to subscribe to HBO and cannot watch Game of Thrones. 
What we both do not get is the ability to pay only for what we watch at a 
reasonable price.

>> Despite your claims that you have access to tons of content, the
>> reality is that the trend is toward paying for live first run
>> content and program archives.
> 
> Chuckles. Remember how you predicted that OTA TV was only going to be for 
> reruns, and no high value content? How many years ago was that, Craig? 
> Decades?

Actually no. Can you find the e-mail where I predicted this?
 
I'm sure that I said that high value content would move from the FOTA networks 
behind pay walls for several reasons:
1. To gain a second revenue stream
2. To bypass the content restrictions - sex, language, nudity, violence - 
placed on broadcasters.

This has in fact happened, at great cost to the broadcast networks in terms of 
the quality of their original programming. We are not subjected to an endless 
stream of reruns from the broadcast networks...

It's more like an endless stream of reality driven drivel.

The broadcast networks are now fighting for about 30% of the TV audience. HBO, 
Netflix, Amazon and others are spending billions for the original programming 
the other 70% watch. Major sporting events have moved behind the pay walls - 
much of the NCAA Basketball Tournament is now only available via TNT, TBS and 
TruTV, which require the extended basic MVPD bundle.

Bert is right about one thing.  The "Golden Age of Broadcast TV" ended many 
decades ago.

Regards
Craig

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