[opendtv] Re: Retransmission battles signal trouble for free TV (too pessimistic?)
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Wed, 6 Jan 2010 10:38:09 -0500
Whatever makes you think broadcasters are in a position to compete on
creating most content? National content creators can spend commensurate
with the size of a national audience. Local content creators must spend
only that amount justified by the size of the local audience. Local
broadcasters just do not have the economy of scale to compete in most
media creation.
First, broadcasters are severely disadvantaged versus the MVPDs and
the Internet, when it comes to the distribution of high value content
created by others.
We have been through the reasons for this over the past few days, but
the REALLY BIG problem is that local broadcasters still control
significant advertising revenues that the congloms covet. Note that
the broadcast networks currently control about 1/3 of broadcast TV
revenues via their O&O stations. If the congloms decide to shutter
the broadcast distribution model they will still control the O&O
revenues, but they will be able to "reclaim" most of the ad revenues
now controlled by local broadcasters, and ALL of the subscriber fees
they are now negotiating.
We're talking about >$10 billion that is currently controlled by affiliates.
I agree that it is difficult for a local station to develop content
that has broad appeal. But the likely survivors in this battle are
going to be station groups that have multiple outlets and more
resources to develop new content businesses.
It is important to keep n mind that these are business decisions. I
am quite certain that many in the broadcast industry thought the
people at Scripps Howard were nuts when they decided to get into the
content business. But they did, and now have one of the most valuable
content franchises that IS NOT controlled by the congloms; HGTV, Food
Network, and Fine Living.
The content for these networks is easy to produce and the cost per
episode is very affordable compared with the top 100 TV shows that
Bert is so enamored of. Last year Scripps spun off the cable networks
division, which is now called Scripps Networks Interactive. It is
very profitable, which allowed SNI to buy a 65% stake in the Travel
Channel and to announce they are investing $100 million in an
International expansion this year.
Meanwhile E.W. Scripps lost several million in the last quarter, in
part because the newspaper division is dying, and their broadcast
station group has seen the same 22% decline in ad revenues as other
broadcasters, but is still profitable.
Mark Aitken talks about re-inventing the broadcast business. In my
lifetime the broadcast business was INVENTED; Radio was king and the
broadcast networks had to invent a new medium called TV.
Technology has a nasty way of of enabling new forms of competition
and entirely new industries. The World Wide Web was still being
invented when the ATSC standard was being created. The Netscape
browser was introduced in 1994.
I started laying the foundation for data broadcasting in the mid
'90s. If broadcasting survives it will be based on a few fundamentals:
1. It will be a mobile wireless service first, which may also deliver
bits to fixed receivers.
2. It will push content to mobile devices for on-demand consumption.
3. There will be a local focus on content, with the community being a
major contributor of this content.
It is less clear that broadcasters can create high value content to
compete with the Congloms and MVPDs. BUT, the ability to develop
content that can be distributed universally via the Internet levels
the playing field - broadcasting can then become the mobile
distribution channel for the content developed by those left standing.
Regards
Craig
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