[opendtv] Re: FCC Eliminates Simulcast Rules

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Wed, 29 Sep 2004 11:23:26 -0400

At 6:16 PM -0400 9/28/04, Manfredi, Albert E wrote:
>I think all of this debate boils down to what you
>wrote above. You believe that the major networks
>prefer for OTA users such as me to become subscribers
>of a multichannel network. So it makes sense for them
>to make their OTA network unappealing.

I didn't say that. I think they are quite happy that you do not 
subscribe to cable or DBS. It tremendously increases the odds that 
you will watch the broadcast networks.  What I DID SAY is that they 
have no economic incentive (but some real disincentives) to offer 
additional program choice to OTA viewers for FREE.

In other words, they LIKE the status quo.

>If they really think along those lines, they would
>be p*ss-poor business people. Some of what's listed
>below is repetition, but seems to apply again:
>1. Other forces, such as Sinclair, will work
>against any such "OTA death wish" on the part of
>networks, assuming it exists. These guys *want*
>the OTA system to work.

Virtually all broadcasters are against  any "network" OTA death wish, 
although there are many who would gladly forego the power bill, if 
they could continue to reach their audience via cable and DBS. 
Sinclair is somewhat unique among broadcast groups in their concerns 
about making DTV work. Most broadcasters could care less, since they 
understand that OTA DTV is not going to have any real audience impact 
for many years to come.

I'm not sure why it is piss poor business judgement on the part of 
the networks to maintain the status quo. They understand that revenue 
growth is going to come from creating new content for the MVPDs, not 
for the OTA audience.

>2. After NTSC shutoff, there will be available TV
>spectrum for others to enter, where there was none
>before. So other enterpreneurs could come in to
>compete. Will the major networks just roll over?
>Don't forget to re-check the FCC local restrictions
>on broadcasters, before coming back with any idea
>that the major networks will just buy up these
>competing new guys.

Thanks for this momentary flash of brilliance Bert.

Now, exactly what incentives exist for local broadcasters or the 
networks to accelerate the day when the NTSC service will be shut off?

It's ALL about maintaining control Bert. it should be obvious that 
they fear real competition, whether it might come from cable, DBS, a 
viable OTA system, or the Internet.

>3. Folk like me would certainly resist any enforced
>subscription, and a sizable number of us still
>exist. Say whatever you like, but it makes no sense
>for networks to ignore 18.9 percent (or even 15
>percent) of the viewing households. If DTT gives a
>given network a way of becoming more attractive than
>the other networks competing over DTT, to 18.9
>percent of TV viewers not to mention DTT users who
>also subscribe to a multichannel service, it seems
>incomprehensible that the networks won't use this

Why SHOULD they use this tool? The networks are NOT ignoring you. 
They are exploiting you. They can ill afford to lose you as a viewer, 
since a sizable chunk of their remaining audience comes from the 
15-18.9% who have no other choice.

The economics for first run broadcast network shows are tenuous at 
best these days. It is growing more and more difficult to make a 
profit from the network showings, especially with the continued 
erosion of the remaining audience. The profits come from the back 
end, with syndication, both in the U.S. and abroad.  meanwhile, more 
and more money is flowing into content for premium services like HBO. 
This was abundantly clear at the recent Emmy's. It looks like the 
plan is to get people to PAY for the good stuff. The good news is 
that MOST people are comfortable with this.

>4. The content they use to make their DTT multiplex
>"more attractive" than the next guy's is
>negotiable. You're stuck on the idea that it
>must be an exact replica of streams they have
>on cable or DBS. Maybe not. At the very least,
>being as unimaginative as possible, they could
>show old movies or old versions of cable programs.
>But that's just an example, not to be taken as
>the only possibility.

Yes, it is negotiable. But it means further dilution of the broadcast 
network audiences. And it is not free. It cost money for programming, 
for operations, and sales. They need to make a profit from the new 
stuff that is greater than the loss from the old stuff. Since this is 
a zero sum game - i.e. the total available eyeballs are relatively 
constant -  that is a difficult financial proposition.

>5. A 24 hour news multicast in an SD subchannel?
>Sounds good to me. CNN seems to have made a go of
>that format. One DTT station per market might
>be able to justify such a stream.

You may well be correct. In a sense, there are a number of stations 
that agree with you, and are not waiting for DTT to get started. KRON 
lost it's NBC affiliation, and is now focused on local news for the 
San Francisco area. WJXT decided not to renew it's affiliation with 
CBS. They are focusing on local news as well.

As for CNN, Fox News, and MSNBC, however, the audience is not huge, 
even on a national basis. Starting up additional news channels that 
can only reach 15-18% of U.S. homes does not sound like a viable 
business to me. What we are looking forward (and backward) to is 
significant consolidation in broadcast news operations. The strong 
will survive, and may well evolve into local 24/7 news operations. 
The rest will simply replace their local news operations with more 

>In short, to me anyway, your obstacles continue to
>sound unconvincing. It's like arguing that Detroit
>is deliberately making cars unappealing, because
>they want everyone to buy the more profitable SUVs.
>But that's not the case. Because some people get
>road rage just looking at one of those behemoths,
>and would much sooner buy a foreign car than an
>SUV. I doubt Detroit will ignore that market.

You analogy sucks.

Convincing you of anything is a challenge.

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