[opendtv] Re: Compensation for content
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Mon, 7 Jul 2014 09:20:15 -0400
On Jul 6, 2014, at 8:39 PM, "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
wrote:
>
> Craig Birkmaier wrote:
>
>> The basis of your argument is that the FOTA content carried by MVPDs
>> is attracting more subscribers to the service. This argument has
>> some fundamental problems.
>
> Might have problems, but it's undoubtedly true. Especially before online
> streaming was possible. More people watch those channels than any other
> single channels, right? And these subscribers are known to wail loudly if the
> cable system drops one of those TV network channels.
Perhaps there is some middle ground here.
Yes people want the broadcast channels, even if they do not watch them much.
The broadcast networks still have most of the most popular programs - just look
at the Neilsen ratings. But the ratings show that the broadcast networks
typically capture less than 40% of the people watching TV during Prime Time,
often less than 30%. And during other day parts the broadcast network ratings
are significantly lower.
This means people are watching:
1. Other cable networks some of which carry off-network reruns.
2. OTT services that carry movies, off-network programming and original
non-network programming.
3. Packaged media.
As for people screaming loudly when there is a retrans consent battle, these
greenmail events are always associated with a major network programming event.
Most are related to a popular live sporting event like the Super Bowl, the rest
with a big episode of a popular TV series (like the final episodes of a series
that is ending).
> Not a convincing argument at all, for your side anyway. Subscribers pay more
> for the non-FOTA channels, yes, **because** they already get the FOTA
> channels in their basic tier! And the broadcasters are therefore
> understandably annoyed, since their content (well, let's be honest, the
> content of their affiliated network) is pretty much the highest quality stuff
> the MVPD carries.
If the FOTA channels were the primary reason they subscribe to the MVPD, they
would likely be among the 8-10% who only subscribe to the lifeline tier.
As the broadcast networks, Time Warner, Viacom and Comcast (NBC) own 90% of the
channels in the lifeline and extended basic tiers, clearly they want people to
pay for all of these channels. But it would be a mistake to believe that
subscribers only watch off-network content. Just look at the ratings.
And then there is ESPN, the most expensive channels in the bundle. Many of the
sporting events carried on ESPN were once available FOTA. Now the best stuff is
moving inside the bundle.
>> Much of the most valuable content offered by broadcasters is now
>> available on a delayed VOD basis via the Internet
>
> I think I know this, Craig. Fact is, most people still don't get TV over the
> Internet, and boxes like AppleTV and Roku hardly help in this regard. They
> limit what you can get. I think the best bet for TV network content, for
> these limited boxes, is probably Hulu Plus, which includes the basic Hulu
> choices too. But Hulu does not carry all network TV. So these boxes
> deliberately make it hard for people. (How many times have we been over this?
The stuff these boxes don't carry is the stuff that makes the bundle work -
mostly sports.
But the fact remains that VOD is growing rapidly, and the ad free services are
growing faster than the ad supported services.
>
>> And then there is the "minor" issue that the most valuable network
>> content commands SIGNIFICANTLY MORE compensation than ad supported
>> cable networks.
>
> I already said that the broadcasters have a legitimate point, if they say
> that their stuff should get at least as much subscription price compensation
> as the ad-supported MVPD-only content. I didn't say as much as, say, HBO.
We disagree on this. The networks make plenty on the first runs of fresh
content. And they will make much more as this content moves through their
second tier MVPD networks, into syndication, and eventually to VOD.
They LOVE the current MVPD model because they get two revenue streams, and are
not likely to license this content to new competitors UNLESS the contract
preserves the bundle.
>
>> Retransmission consent dollars are on top of all of this, and are
>> a significant factor in the latest round of price increases for
>> MVPD service.
>
> When these retrains consent fights started, a few years ago, I seem to
> remember that the TV broadcasters were getting either no subscription fee
> kickbacks, or no more than channels like the Food Network. I seem to remember
> Fox complaining about this, and at the time I thought, yeah, they have a
> point. So how about some real numbers? I think they're hard to come by. It's
> just when the
>
>> Just to be fair, the FCC could give local broadcasters a protection
>> period on MVPD systems - say ten years before the network could
>> become just another cable network without distributing through
>> affiliates.
>
> Hey Craig. We're beyond that now, for heaven's sake. This is the Internet era.
>
> Bert
>
>
>
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