[opendtv] Re: News: Sinclair Shares Take Hit on Worries About CW Impact

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Fri, 27 Jan 2006 08:47:56 -0500

At 6:55 PM -0500 1/26/06, Manfredi, Albert E wrote:
>Craig Birkmaier wrote:
>>  Maybe this is a "message from above" to our friends at
>>  Sinclair: Don't worry about trying to compete with the
>>  broadcast networks, use your bandwidth to compete with
>>  cable...
>Perhaps, depending what that means to you.
>But was I surprised by this UPN/WB merger? Not really.
>Just speaking for myself, the programs I followed on UPN
>were the Star Trek series (Voyager and Enterprise) and
>non-prime-time offerings like Stargate SG-1 and The
>Outer Limits. Star Trek ended. They stopped Stargate SG-1.
>Outer Limits seemed spotty, and I haven't seen that
>listed lately either. Oh well, UPN.
>As far as I could tell, WB had shows for pre-teens.

Your comments here are very revealing. They suggest something that we 
all know intuitively, but tend to overlook.

Apparently you did not include UPN in any channel surfing that you 
may do. Given your comments over the years about recording shows on 
one or more VCRs, it is apparent that you do not "surf" the broadcast 
networks, but rather, you make appointments to watch only the shows 
you like. You use the VCR to handle the fixed appointment times, so 
that you can consume your favorite show on YOUR schedule. Program 
adjacency is largely wasted on people like Bert.

Now here is an uncomfortable though...

The majority of TV viewers are just like Bert.

If a program is really compelling, we may still sit down at the 
appointed time to watch a show when it airs. Live television 
programming is the last stronghold of broadcast TV, providing viewers 
with an incentive to adapt their schedule to the TV. But most TV 
programming is NOT live. In recent weeks we have seen all kinds of 
announcements related to making it easier to see network programs.

  - Cable systems are offering "start over" VOD services allowing 
viewers to see their favorite shows any time after they have aired.

- You can now pay extra to see some shows before they air on the 
broadcast networks.

- And you can pay various services to download episodes of some 
programs after they have aired.

It is getting easier and easier for consumers to become the program 
director, choosing the specific programs they want to watch, outside 
of the traditional context of THE NETWORK, the local station, and the 
appointment book (TV Guide).

UPN and WB were able to generate solid audiences for a few programs, 
but they were not able to hold these audiences for other shows.  As a 
result, they were unable to operate profitably.

Local broadcasters face the same dilemma in filling up a DTV 
multiplex. If they offer more programming choice they MAY be able to 
attract more viewers, but they may also dilute the audience for their 
main programming. In the end, they must generate enough additional ad 
revenue to cover the costs of the extra programming and the increased 
costs of operations.

Providing more access points (appointment times) for popular shows 
may be a very good strategy for broadcasters, allowing them to 
accumulate larger audiences over time, but only if they can do this 
without increasing programming costs. Unfortunatley this is not the 
way the current commercial broadcast model works.

>I don't think it's impossible to compete with the other
>broadcasters. Cable and DBS seem capable of it.

Cable and DBS are capable of it because of the underlying business 
model upon which the industry was built. First, operational costs are 
kept to a minimum - cable head ends are fully automated, including 
the ability to insert local ads into upwards of 25 "cable networks." 
And these networks have been built around the concept of providing 
multiple access points to their programming so that they can 
accumulate a large audience over time. Even more important, most of 
these networks have built audience around relatively low budget 
productions, without the highly paid Hollywood stars; they can make 
money with relatively small niche audiences of 1-2 million viewers.

What is not generally known, is that for MANY broadcast network 
programs the audience is SMALLER than for these cable networks. Top 
rated "cable shows"now routinely deliver larger audiences than the 
bottom half of the broadcast network schedules. It is not uncommon 
for shows on the big four networks to deliver less than 2 million 
homes, and when this happens, the network is usually losing money. 
This is one reason that the broadcast networks have moved to new 
magazine formats, which can be produced cheaply using resources that 
already exist for their news operations.

But the key word in Bert's statement is one that i jump on every 
opportunity I get.

"I don't think it's impossible to COMPETE"

Clearly it is not impossible to compete. What is missing is the WILL 
to compete, and the biggest reason for this is that cable and DBS 
subscriber fees are replacing the affiliate compensation that the 
stations once got for the broadcast networks. Why compete with cable 
and DBS, when you can get them to collect subscriber fees from your 

The solution is simple. Use the spectrum to compete with cable and DBS.

But this solution would only benefit consumers; the stations, the 
networks, and the cable and DBS multichannel services would be forced 
to revert to an even older business model - relying only on the 
revenues from advertising to pay for the programming.

Why would a cable system pay a broadcaster for their programming, 
when that broadcaster is offering the same content (both broadcast 
and cable networks) for free?

This scam only works as long as there is no way to get the content 
that now makes up more than 50% of what people watch, without paying 
for a multichannel TV service, with its built in subscriber fees.

>I know you think more along the lines of Kon's idea. I
>find that far more shaky, as a 100 percent proposition,
>than competing with interesting programs.

What Kon is suggesting is not only inevitable, is is already 
happening. You don't go to the movie store an buy/rent all of the 
shows that NBC airs on Tuesday night on a DVD. You buy/rent specific 
programs that may have been aired on a broadcast network or a premium 
cable channel.

When the technology is in place to provide the program you want on 
demand, the only issue left is how much does it cost?  When the cost 
is less than what a consumer pays now for a multichannel service and 
for program rentals and purchases, there will be be REAL marketplace 

This is bad news, not only for broadcasters, but for the multichannel 
services as well.

Broadcasters would be well advised to tell the networks (both 
broadcast and non-broadcast) where to stick it. They should re-think 
the existing local station business model and move to a more flexible 
(and reliable) transmission infrastructure that delivers bits both to 
fixed receivers and things that move. And then they should make the 
content producers pay for the delivery of their bits. If a content 
producer wants to charge for a program, the system should support 
this, and the necessary encryption to make it work.

But we have been through all of this before. The reason ideas like 
this are gaining some credibility can be summed up in a word...


Broadcasters would be well served to enable an inevitable future, 
rather than trying to delay it.

>Interesting to think about offering what amounts to VOD
>over a broadcast network. Seems possible but not overly

Convenience is really a question of adaptation to a new business 
model. It is more convenient (and cheaper) to subscribe to a magazine 
than to go to the newsstand each week or month and buy it.  The 
important factor in all of this is peer-to-peer promotion.

It is difficult to grow your audience if there is no opportunity for 
viewers to watch an episode after it has been broadcast, until a 
rerun that may be six month away. On the other hand, if all 
programming had multiple access points - still a broadcast 
technology, not VOD - then you could schedule an "appointment" the 
next time the episode is broadcast.

Broadcasters need to adapt to and enable this new business model. IF 
they do it right, they CAN COMPETE with cable and DBS; in the process 
they will become an extension of the Internet, providing the big 
pipes for the last mile...without the pipes (wires).


You can UNSUBSCRIBE from the OpenDTV list in two ways:

- Using the UNSUBSCRIBE command in your user configuration settings at 

- By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word 
unsubscribe in the subject line.

Other related posts: