[opendtv] Re: News: GOP Wins Mean Continued Key Clout
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Wed, 10 Nov 2004 07:49:27 -0400
At 11:35 AM -0500 11/9/04, Manfredi, Albert E wrote:
>I guess what you're suggesting is that the national
>cap ends up helping large station groups, because the
>major networks need them in order to cover the land
>mass of the US, what with the national cap set to 39
>percent. That's one way to look at it.
No, that is NOT what I am suggesting. What you wrote above is the
current reality because the major networks were all at, near, or
above the 35% ownership cap set by Congress in the 1996
Telecommunications Act (which raised the cap from 25%). The FCC
issued rules in June of 2003 raising the cap to 45%, which the courts
then put on hold. Congress then stepped in late last year and raised
the cap to 39% to protect CBS and FOX, both of which were above the
35% cap. If you want more details on the current ownership limits,
and the history of these limits, here are two good summaries.
http://www.wrf.com/publications/publication.asp?id=92844372002
http://www.journalism.org/resources/research/reports/ownership/rulechart.asp
In theory, the national ownership cap prevents the networks and large
station groups from having too much control over broadcast television
programming. Clearly this intent is not working; as you note, the
networks have access to virtually 100% of U.S. homes, via OTA, cable
and DBS. Large station groups like Sinclair, Belo, Scripps Howard, et
al, DO NOT have access to the full national audience. With respect to
broadcast operations, they are currently limited to owning stations
that reach only 39% of U.S. homes.
So what's the real issue here? It is obvious, and we have been over
this too many times to mention. It's all about money.
Currently, all broadcast TV stations and the commercial networks
generate something in excess of $30 billion in revenues each year. Of
this, the commercial networks, and their owned and operated stations,
control about half, or roughly $15 billion annually. The other half
is still controlled by other stations groups and independently owned
broadcast stations. Some of these revenues flow back to the
conglomerates via syndication fees for programming.
What the conglomerates want is obvious. They want to control the
other half of the revenues generated PRIMARILY by the carriage of
network content by affiliates. As a secondary goal, the conglomerates
understand that once they have total control over broadcast
television, they can use the infrastructure to compete more
effectively with cable and DBS. But first things first.
First they need to control broadcast distribution; then they can
start to put the squeeze on cable and DBS. Actually, thanks to
re-transmission consent, the networks already have tremendous
financial control over the multichannel distributors.
>The other possibility, though, is that a large and
>well designed OTA infrastructures owned by third
>parties could be just as addictive to the major
>networks as cable and DBS are.
Hmmmmm...
Speaking as if I were the owner of one of the networks...
"We can help our affiliates build such a network and take half of the
revenues, or we can ride down the good ship "NTSC" until the OTA
franchise is in danger of total collapse, then rush in to save it in
return for total control."
That's a no brainer!
>You seem to go on at length about how the major
>networks depend almost entirely on multichannel
>service providers to access the viewership, and that
>they *couldn't care less* about their OTA plant
>except as it gives them access to cable and DBS.
Yes...and your point is?
>
>So be consistent. If the major networks couldn't
>care less about their OTA plant, they should
>welcome having other organizations run that aspect
>of the operation. And with economies of scale, it
>can only help if these other organizations can
>access *all* markets, as big cable and all DBS
>companies do.
You are missing the point completely. While it is true that the vast
majority of viewers now subscribe to a multichannel service, it is
the rules related to carriage of broadcast television programming
that have given the networks the power they needed to rebuild their
domination of the programming we watch.
So while it is true that the OTA audience is not the pot of gold at
the end of the broadcast rainbow, that pot does contain the keys to
the kingdom, in the form of government regulations that have allowed
the networks to regain control of 90% of the content we watch.
Don't get hung up on what could be done with the broadcast
infrastructure. We all know that there is vast potential for the
service IF it is built out properly and allowed to operate in a
competitive marketplace. Unfortunatley, real competition is not what
the media conglomerates want...They fully understand the power they
have operating as an oligopoly.
>
>> The point of posting this story was to raise the
>> question of what's going to happen next?
>
>And that's what I already covered. No big changes
>that impact anything. Even if the Democrats had won.
>Even if the telecom act of 1996 gets rewritten,
>because the parts that would be rewritten had not
>been effective anyway. E.g., unbundling of the local
>loop did not succeed at doing what was intended, for
>reasons that should have been obvious even in 1996.
>So a rewrite won't reduce the availability of
>broadband access to the consumer, and might instead
>be beneficial. Even ther Democrats have figured that
>out.
Perhaps.
We all understand that re-writes of any major legislation that
controls an industry can be counterproductive. This is EXACTLY why
the politicians allow the current sores to fester. They can extract
more money from their co-conspirators, by changing the rules
periodically, then letting the lawyers argue for years about what
they intended. It is a vicious cycle that is as close to "perpetual
motion" as the laws of political physics will allow.
One can question whether ANYTHING has changed, given the "mandate"
for the new administration. One can also question whether the media
conglomerates have just shot themselves in the foot, by virtue of
their misbehavior with respect to coverage of the recent campaign.
Bottom line, this is a discussion about REAL competition, versus
continued techno-political gerrymandering. I fully agree with you
that there would be no good reason for the national ownership caps in
a truly competitive marketplace. But we will never see a competitive
marketplace, as long as a handful of companies are allowed to
maintain ologopolies in both content and distribution.
The only solution that I can see working is to completely decouple
content and carriage. If we build a REAL digital broadcast
infrastructure and create a REAL marketplace, where content producers
can compete for carriage, we will make REAL progress in the DTV
transition.
Regards
Craig
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