[opendtv] Re: News: Northwest Station Pulls Signal In Retransmission Battle
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Fri, 5 Jan 2007 09:00:03 -0500
At 8:55 AM -0800 1/4/07, John Willkie wrote:
No, I'm saying that cable folks spend half their time watching broadcast tv,
and the loss of that would cause them to lose half their revenue. Since
they pay little or nothing for what half of their viewers are watching at
any one time, they wouldn't lose half their costs. It would fundamentally
affect their business model.
Is my math too fancy for you to parse?
No, it was your use of language that was difficult to parse. As for
the math, it's just wrong.
Please read the following:
http://www.mediaweek.com/mw/news/media_agencies/article_display.jsp?vnu_content_id=1003521968
Report: For Fifth Year, Cable Projected to Beat Out Broadcast in Prime
Anthony Crupi
DECEMBER 14, 2006
For the fifth consecutive year, ad-supported cable is projected to
beat out the broadcast networks in prime time, boasting a 55.4
percent household share year-to-date, compared to the six broadcast
nets' 40.4 share.
According to Nielsen Media Research data crunched by Turner chief
research officer Jack Wakshlag, while cable's dominance of prime time
continued in 2006, its growth appears to be leveling off. If the 69
measured cable nets reach the projected 55.5 share at the end of the
year, that number represents growth of just one-tenth of one percent
versus last year's share.
The same principle applies with the adults 18-49 demo. Cable should
win out in the core demo for the third consecutive year, with a
projected 44.1 share, a decline of two-tenths of a percentage point.
Meanwhile, broadcast is projected to post a 36.7 share among adults
18-49 in prime, a drop of one-half of a percentage point.
If cable's ratings surge over the last five years--since 2001, its
share of the 18-49 demo has grown 7 percentage points, or 15.8
percent, while broadcast has dropped 7 points, or 16 percent--has
tapered off, that may be a function of prime having reached a
saturation point. According to Wakshlag, the amount of prime time
viewership hasn't changed since 2001,
holding firm at an average 7.5 hours per week per person.
Nor did the ratio of ad sales dollars to share change in 2006. To
date, cable is getting just 31 percent of advertisers' prime time
spend, versus the 69 percent that goes over to the broadcast nets.
Wakshlag reported those same numbers in his year-end ratings
presentation of Dec. 2005.
Through Sept., the broadcast nets commanded $10.72 billion in ad
sales, according to Nielsen Adviews, down 7.6 percent from the $11.59
billion they took in throughout 2001. On the other side of the
ledger, this year saw cable doing $4.77 billion in ad sales through
Sept., versus $3.33 billion in 2001, an increase of 30.2 percent.
Of all measured ad-supported cable nets, USA Network is projected to
sweep the annual prime time ratings competition, finishing first in
total viewers (2.62 million), as well as among adults 18-49 (1.17
million), 25-54 (1.19 million) and 18-34 (533,000). TNT, meanwhile,
will take second among total viewers (2.4 million), and should finish
second in its delivery of 18-49s
and 25-54s. Sibling net TBS will end the year in second place among
adults 18-34, while TNT should take fourth in the demo.
ESPN will end the year in third place in total viewers (2.09
million), and should land in the same spot in all three core demos.
Year-to-date, the sports net has hiked its share of 18-49s by 15
percent, thanks in large part to its acquisition of Monday Night
Football.
Rounding out the top 10 most-watched cable nets of 2006 are: TBS,
with 1.62 million total prime time viewers; Lifetime (1.51 million);
Cartoon Network (1.5 million); Nick-at-Nite (1.49 million); Fox News
Channel (1.42 million); FX (1.26 million) and Spike TV (1.24 million).
And that's just Prime Time. In total day cable hit 60% last year. For
week 12 of the current season the total day share for cable was a 57,
with the broadcast nets at 34, a 23 point spread.
Now to your assertions. What revenues does cable generate from the
carriage of broadcast stations?
They cannot insert ads into broadcast stations.
Although it is difficult to determine, they do not charge a separate
fee for local broadcast stations, as do the DBS systems. Tom Barry
recently noted that Cox limited basic cable costs only $5 per month
if you have a cable modem, which presumably means that the carriage
costs are covered by the cable modem fees. From this $5 they must pay
retrans consent fees to the broadcast stations they carry and other
subscriber fees (TBS, WGN).
So the only case you can build is that without the broadcast
stations, people would not subscribe to cable. Then again, you can
say something similar regarding USDTV - without many of the popular
cable networks it is difficult for USDTV to capture subscribers. The
reality is that most people want and expect BOTH.
The other reality is that broadcasters now expect to receive millions
in retrans consent payments from cable and DBS. If cable stopped
carrying broadcast stations it is the broadcasters who would now see
a decline in revenues, not to mention ratings.
What we have today is a symbiotic relationship between the
broadcasters and the multichannel distribution systems. The
multichannel systems have become the billing and customer service
organizations for the broadcasters.
All of this squabbling over retans consent fees is just political
cover, with the intent to create the impression that cable is trying
to protect its subscribers from escalating bills. The reality is that
those bills have grown 95% in the past decade and that the cable/DBS
systems and broadcasters are laughing all the way to the bank.
Regards
Craig
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