[opendtv] Different distribution model
- From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
- To: <opendtv@xxxxxxxxxxxxx>
- Date: Wed, 14 Nov 2007 12:00:47 -0500
Craig Birkmaier wrote:
>> I already offered a different model from what we have
>> now, as a possible solution to this dilemma. It would be
>> one where the content providers, including the local
>> broadcasters, pay the neutral cable and DBS companies for
>> carriage, but get all the ad revenues. Then these content
>> sources would more obviously see the benefits of as many
>> carriage media as they could use. Including their own OTA
>> plants.
>
> Broadcasters ALREADY get ALL the ad revenues - cable cannot
> insert ads into local stations unless the stations agree. I
> have seen this happen with some research studies, but the
> everyday reality is that the local broadcast sales guys are
> knocking on the same doors as the Cable Rep sales guys who
> sell ads that get inserted into cable channels -they are not
> splitting ad revenues, but they both are going after the
> available local ad budgets.
Actually, I was thinking that not just the local broadcasters' content,
but all of the channels carried by a cable or DBS system, would work the
same way. Strict separation of content and carriage on these umbillical
media.
The cable or DBS systems collect subscribers fees. The content owners
get the ad income. The content owners who want carriage on the
umbillical systems pay for it. In cases where the program is ad-free,
the content owner gets his share of the subscription fee. Obviously,
these would be the premium channels, for which the cable or DBS system
would collect higher subscription fees. Otherwise, the subscription fee
revenues go mainly to plant maintenance and advertizing. (These
multichannel systems can certainly sell ads to the owners of the program
streams, if they want.)
Some of these content owners will also own their own OTA outlet, and
some may rely on affiliated stations if they want OTA coverage. The
content owners can decide what is the best balance between transmitting
OTA and over the subsription systems. Content owners may not have to pay
a middleman for OTA carriage, or if they do, the cost should be lowest.
So that's the advantage of using OTA for distribution.
This should result in an optimal mix, where the content owners can
figure out how to get the most bang for their buck. The OTA medium, the
cheapest but also the most spectrum-starved, would probably be used for
the mass market programs. If the content owners determine that OTA
coverage is not good enough, they can simulcast the same programs OTA
and over the subscription media. This decision should be up to them and
to their customers, with no need for any govt intervention.
The alternative we have today seems to have to depend on laws to work,
rather than on sound business decisions.
Bert
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