[opendtv] Re: McAdams On: TV Everywhere, Why Aereo Wins the PR War...

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Mon, 15 Jul 2013 15:08:47 -0400

On Jul 14, 2013, at 9:18 PM, "Manfredi, Albert E" 
<albert.e.manfredi@xxxxxxxxxx> wrote:
> As you saw in another article, apparently CBS isn't getting anywhere close to 
> that buck. And yet, they have survived. Your arguments have always assumed 
> that FOTA TV cannot be self-sustaining, and that the major network stations 
> only survive from subscription fees. I don't think that's true. Somehow, the 
> major network stations have survived a very long time even while getting far 
> less than the cable-only channels get, in terms of $/subscriber/month.

Let's not get irrational here Bert. The media congloms are doing VERY well 
thank you, just look at what has been happening with their stock prices. And 
the TV portion of their business - especially their non-broadcast businesses - 
are doing exceptionally well. Just consider the billions that ESPN drives to 
the bottom line for Disney; then consider how much they may lose on  "The Lone 
Ranger."  The content creation business can be risky, but the network divisions 
are doing quite well, and retrains consent payments are a major reason.

It is true that CBS is not getting a bum per subscriber yet; let's see how big 
an increase they get from Time Wartner. But most analysts believe that all 
network affiliated stations will be getting a buck a month within the next few 

Remember, the broadcast networks and their affiliates have been VERY profitable 
for decades; subscriber fee revenue is just icing on the bottom line. Most 
cable networks lost money for extended periods of time as they created viable 
viewing alternatives to the broadcast networks. The reality today is that the 
networks get less than 40% of the audience in prime time - but the rest of the 
audience is split among dozens of channels. 

> So, something must keep them afloat. To me, that something is ads, and 
> showing evidence of additional eyeballs has to help that equation.

Yes, advertising revenue is still the major source of income for the broadcast 
networks. What is keeping them afloat, however, is their ability to keep 
charging more per pair of eyeballs every year. As the number of viewers has 
declined, the cost per thousand has increased more than enough to keep pace. 
Unfortunately, this is not necessarily true for local broadcasters, who compete 
with local cable companies for ad revenues, not to mention the fact that most 
network compensation has been eliminated, and the networks want a percentage of 
any subscriber fees they can negotiate. Fortunately, political advertising has 
grown fast enough to keep most local broadcasters liquid.

Keeping track of second screen viewing is important to the networks because 
viewing habits are shifting, often away from watching shows when they are aired 
on the local network affiliate.  Keep in mind that the cable networks have been 
accumulating viewers for their programs for two decades - the typical cable 
show is aired many times, enabling word of mouth promotion and after the fact 
DVR recording, if a viewer catches the tail end of an interesting show.

>> Deborah was describing the problems associated with the MVPD verification
>> systems used by every content owner that is requiring MVPD verification
>> in order to enable OTT streaming.
> Sorry, Craig, but this is another example of you projecting your long-term 
> arguments into someone else's subject matter. Here is what Deborah said:

Perhaps in this case we may both be correct. Here is the whole paragraph you 
quoted, and the one that preceded it:

On the end-user side, for example, consider "TV Everywhere," the television 
industry's underwhelming appellation for delivering programming to any type of 
screen Chinese labor can churn out. The conundrum of TV Everywhere is the same 
one unleashed by Napster in 1999-digital content is virtually impossible to 
control. Consequently, TV Everywhere is subject to authentication, the types of 
which vary like black-hole particle behavior, or a pack of feral cats on Red 

Rather than a single, simple, universal interface that provides TV Everywhere 
access to all network content, each network and provider has to have its own. 
That's understandable from their perspective, but a lot of methane for 
end-users. I couldn't watch any of the 2008 Beijing Olympics online, for 
example, because I was not a cable subscriber. In other words, because I was a 
loyal viewer of NBC's over-the-air signal in Los Angeles, I was rewarded by 
being locked out of the network's online Olympics coverage.

Clearly Deborah was talking about the authentication problem, and the 
fragmentation of solutions. I would add that the version of "TV Everywhere" 
offered by Comcast has gone a long way toward resolving these issues…

For Comcast subscribers. 

> This is not about how they get paid. This is all about the web sites you go 
> to for the different networks. She wants a single Internet interface for all 
> her TV content. It could not be plainer. And that's because she hasn't 
> accepted the fact that TV content is conceivably no different from any other 
> content on the Internet.

Sorry Bert, but this IS about how they get paid. Let me count the ways:

- Ads for those who watch the original broadcast via an OTA station;

- Ads for VOD OTT streaming when a show is offered in the clear via a network 

- Ads and subscriber fees for viewing via an MVPD service;

- Ads and subscriber fees for viewing on OTT services that require MVPD 

- And revenues for network programs placed into both domestic and international 

Yes, Deborah discusses the issue of finding programming, although, as you 
frequently point out, search engines do a decent job of finding content that is 
not locked up inside a walled garden like Netflix or Hulu Plus. But like 
yourself, what she is really complaining about is the whole business model of 
bundling, which is being extended to second screens via the MVPD subscriber 
verification process. 

I would add that it is trivially easy to download an app or bookmark your 
favorite entertainment sites on a tablet or PC.

> How absurd, Craig. For that matter, if the TV networks want to charge a fee 
> for their content, they too can ask for a credit card. Being able to use a 
> credit card doesn't result in a single universal UI for TV content. Which is 
> what Deborah was bemoaning.

Not absurd at all Bert. As Deborah noted, the networks do not want to see their 
business "Napsterized." 

The networks are happy to let others deal with the credit cards - Napster, 
iTunes, Amazon, Hulu Plus, Walmart, Target, et al. 

And just how would you define a "Universal UI for  TV content?" 

Would it include all of the programs you own on physical media, and/or programs 
you have recorded on your DVR?

Would it include the EPG for your MVPD service?

Would it include every possible VOD instance of a program, or just those that 
you can physically and legally access? 

Would it include every YouTube video? 

It's not quite as simple as you make it sound. 

> Unless the broadcasters themselves own and distribute servers to the various 
> ISPs in the market, that function would be taken over by the ISPs and CDNs. 
> And the local broadcaster would become just a local news and weather content 
> creator.

Kinda like the local newspapers of yesteryear. We already agree that for 
everything but live programming, the Internet has huge advantages in delivering 
what you want, when you want to see it. If the networks and program syndicators 
ever figure out how to eliminate the middlemen, there won;t be much left for a 
local broadcaster to do.


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