[opendtv] Re: How the dollars flow
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Sun, 27 Sep 2015 11:04:50 -0400
On Sep 26, 2015, at 7:56 PM, Albert Manfredi <albert.e.manfredi@xxxxxxxxxxx>
wrote:
Craig wrote:
Then there is the political reality of preserving FOTA broadcasting AND the
large chunk of audience that the networks would lose if they moved behind
the
pay walls.
No argument there. I already explained that.
Wow! Agreement!
Sure, but middlemen who add value. Online, congloms work with CDNs. OTA,
congloms work with broadcasters. And over MVPDs, the congloms go through two
middlemen, even though they could deal with just one.
I'm not sure what an online conglom is, but yes, TV content delivered over the
top generally uses CDN, although Amazon, Netflix and Apple are building their
own CDNs. Most OTT services are owned by the TV Congloms, or provide the
content for the new upstarts like Netflix and Amazon.
There's a good reason the congloms go through the MVPDs, although I would
characterize the relationship as 1.5 middlemen. They use MVPDs because they
handle customer service, collect subscriber fees, and sell the big bundles
filled with networks from the content conglomerates. Most of these networks
have only one middleman, the MVPD. Only the broadcast networks have two
middlemen. This actually benefits the congloms as it brings retrans consent
into play. The congloms use this as leverage to negotiate carriage fees for
both the broadcast network and their cable networks.
You can keep trying to change their business model, but it's obviously
working
Didn't we just see a piece where Fox (the network) wanted a bigger share of
the retrans consent pie?
So?
The networks have been sucking more money out of their affiliates for decades;
they could do this because the profit margins for most stations were often 3-5
times higher than most other businesses. They can still do this because retrans
consent dollars keep increasing and political advertising is growing.
Obviously, the MVPD has to get permission to transmit content it doesn't own,
Craig, and compensate the owner. The only question here is what middlemen
need to be involved in the negotiation, over each specific delivery medium.
I just explained that. Retrans consent gave the congloms the leverage they
needed to take over the MVPD bundles, and it is still being used to force
higher subscriber fees.
http://www.pcworld.com/article/2047502/70-percent-of-us-residents-have-broadband-access-study-finds.html
in 2013, 70% of households had broadband access, and only 3% still used
dialup.
Yup. FOTA TV is still the way the lowest economic strata gets their
entertainment and propaganda fix. Thea's a good reason that Univision and
Telemundo reach millions of FOTA homes.
Regards
Craig
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