[opendtv] Re: Local TV poses hurdle to streaming services - MarketWatch
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Sat, 5 Sep 2015 23:08:49 -0400
On Sep 5, 2015, at 7:47 PM, Albert Manfredi <albert.e.manfredi@xxxxxxxxxxx>
wrote:
Point being, to the TV network/conglom, the OTA broadcasters were essential.
They were the only means available to get network TV shows out to people.
Ancient history. By the late 1980s the majority of U.S. homes got their TV from
cable. Almost thirty years later the content congloms still rely on OTA
broadcasters; they could have dumped local affiliates a long time ago.
The market based TV system in the U.S. is still thriving, and is still propped
up by the politicians and regulators. And local advertising is very much part
of the appeal, for both OTA broadcasters and cable systems.
In the Internet era, the OTA broadcasters need to create for themselves an
equally essential role. The retrans consent role is phony make-believe, as if
that high value content were created by the local station. So no, I mean a
truly essential role. Not some trumped up role that the TV networks won't
value.
The networks still value the role that local broadcasters play - it's called
retransmission consent and reverse compensation. Retrans consent is bringing in
$6.2 billion this year and is projected to grow to $20 billion by the end of
the decade. And stations are sending the networks another $1.3 billion in
reverse compensation fees this year; these fees are expected to grow to more
than $3 billion by the end of the decade.
In case you don't know what reverse compensation is Bert, it is a portion of
the revenues stations collect for ads they sell in the most popular network
programming.
As for an essential role for local broadcasters, the Internet is not a
significant factor. As long as a broadcaster can offer high quality content -
mostly from the network they are affiliated with and syndicated programming -
they will survive. Local news also helps, but like newspapers before them, one
may question how many local news organizations a market will be able to support.
If the FCC decides to mandate that Internet MVPDs must carry local stations, as
they do for cable and DBS, there will be little reason for local stations to
re-invent themselves. If not, they will survive as long as they are
profitable...and most are still profitable - VERY profitable in major markets.
When you have a local monopoly walled garden distribution medium, like legacy
MVPDs, I repeat, market distortions such as these are possible. These
artificialities become way more difficult to enforce, on the 2-way, neutral
Internet. But nothing beats true added value.
See above. The artificialities are why these oligopolies still exist.
So, the CONTENT created by local broadcasters is simply not the main event
here.
Agreed. But that does not mean local broadcasters are worthless or unnecessary.
They ALSO live off of the main events that the content congloms deliver through
them. The local content is still important, especially during emergencies. The
local ads make it economically viable.
Instead, take, for example, a new role such as the local CDN. It is analogous
to their previous role as OTA transmitters. And since a CDN has equipment
physically installed in the local ISP nets, it becomes unnecessary to beg the
govt for artificial protection from competition (from other markets).
Local CDNs already exist. Gainesville has a major Akamai presence. And CDNs do
much more than delivering video; they are critical to e-commerce, where slow
response times can cause lost sales.
It is the local cable companies that have the best opportunity to become CDNs -
or to host edge servers for the national/international CDNs. They already have
all the live linear streams, including the local broadcast stations. But far
more important, they have most of the local broadband customers.
Regards
Craig
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