[opendtv] Re: Sony To Take Viacom Over-The-Top | Multichannel

  • From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Sun, 14 Sep 2014 10:05:02 -0400

On Sep 13, 2014, at 7:41 PM, Albert Manfredi <albert.e.manfredi@xxxxxxxxxx> 
> I've quoted more than one article in which *even* ESPN has indicated that 
> they are considering to change, and changing, this way of operating. And the 
> best you can do is repeat your own interpretation of the status quo of 20 
> year ago. Argue with John Skipper, if you must. I quoted him directly.
You've quoted articles that are saying that ESPN Is trying some experiments, 
and some authors who are stating "their" opinion that ESPN may be changing. You 
HAVE NOT provided evidence that ESPN is doing anything to make their most 
valuable content available outside the bundle.

> Plus, I've already suggested to you more than once that "bundles" with OTT 
> sites can be totally different from the MVPD bundles. Remember? For instance, 
> that individual congloms can now create their own bundles, unimpeded by other 
> congloms.


Please show me an example. 

Yes, MVPDs may offer different channels in their bundle, but the differences 
are primarily among small niche channels that some place in the bundle while 
others place them in additional tiers. And in some markets valuable local 
sports franchises are part of the bundle, based either on ownership by the MVPD 
or rights deals with the sports franchise. 

At this time there is NO MVPD bundle equivalent. There are many new OTT portals 
that have purchased rights to programs that aired originally as part of the 

> You of course disagreed. But surprise surprise, this too is coming to pass, 
> as you see with the Viacom deal with Sony. Viacom is offering a 
> Viacom-exclusive bundle, and it's not clear whether this has any impact on 
> the other congloms and what deals they can make with Sony (or anyone else). 
> So it's not just "the bundle" switching from MVPD broadcast to IP OTT. It's a 
> totally different game. Argue with Sony and Viacom, if you must.

No Bert, Sony is not offering a Viacom bundle. The recent announcement is that 
Viacom has licensed content to Sony that will be included in an OTT MVPD 
equivalent. Sony has not announced this service, nor have they stated what it 
will include. They will need to license most of the popular channels in the 
bundle to compete, and will likely offer much of the content on a VOD basis as 
well as live streams for each channel.

> Again, facts contradict what you say. It's *not* "the bundle," for one. It's 
> a different type of bundle entirely, or no bundle at all. And, as I already 
> said before, it does NOT take a huge viewership drop before these folk change 
> their modus operandi. Don't believe me? Listen to John Skipper, then. His 
> words verbatim:

Ratings for live sports are UP. They can lose 10% of existing MVPD subscribers 
and still be highly profitable. But the facts contradict you - there is no 
evidence, or predictions of this magnitude of decline in MVPD subscriptions.
> "[John Skipper] added that while he could not imagine more than 10 percent of 
> pay-TV subscribers cutting the cord, 'big numbers don't have to flee the 
> system to have a profound effect on ESPN.'"
> Remember when I said that it's the first derivative in viewership numbers 
> that matters? ESPN and HBO get this, Craig. This does not sound to me like 
> someone mired in old business models. The best you can come up with is older 
> articles that explain how lucrative sports coverage on TV is. But I'm showing 
> you direct quotes from ESPN, and HBO for that matter, and more than once, 
> from very recently, that show these guys are not stuck in the mud as you seem 
> to be. Both of these franchises have lost viewership, and therefore both of 
> them are taking action.

ESPN and HBO are very different. HBO IS NOT part of the bundle; they have 
ALWAYS been a premium service that is in addition to other MVPD services. The 
requirement that you take the bundle in order to buy HBO is changing, as it 
should. HBO competes with Netflix, Showtime and other portals that provide 
access to movies on demand. The old streaming business model of HBO and 
Showtime is what is changing, as consumers prefer to watch movies (and original 
shows) on demand. They have little choice but to move to OTT VOD subscriptions 
to remain competitive - the "they" being HBO and Showtime.

ESPN is reliant on the subscriber fees from "the bundle" to generate the 
revenues needed to pay for expensive rights packages. They rely on the reality 
that a very significant percentage of MVPD subscribers pay, but do not watch 
ESPN. If they lose this revenue they will need to nearly double the monthly 
subscriber fee to survive. They will keep propping up the bundle as long as 
they can. 

To make this absolutely clear, DO NOT expect Sony to launch a MVPD competitor 
without ESPN as part of the mandatory bundle.
>> If ESPN does change their business model in the future, it will not be a 
>> free ad
>> supported service. It will be a pay service like Netflix.
> John Skipper himself is more flexible than your imagination makes him. He has 
> directly mentioned ESPN not bundled with any other content, he has directly 
> mentioned ESPN ad-supported. No one is disputing that some or even most of 
> the stuff will come with a subscription fee.

He directly mentioned an experiment with a sporting league that has struggled 
to build an audience. He did not suggest that ESPN is considering this for the 
expensive content that creates the demand for their channels.
> Give it up, Craig, especially when I'm quoting the people who actually make 
> the decisions.

You are desperately trying to create an inaccurate picture of the future, using 
innuendo to build your arguments. Your "facts" don't add up to a credible 

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