[opendtv] Re: The Motley Fool: How the Golden Age of Television and Baseball Ends
- From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Thu, 27 Nov 2014 01:03:00 +0000
Craig Birkmaier wrote:
> As usual Bert ignores the stuff that is pure speculation, like:
http://www.fool.com/investing/general/2014/01/12/how-the-golden-age-of-television-and-baseball-ends.aspx
> "One cable network alone wouldn't have a watershed impact, but if several
> companies began testing moving more content away from cable and into online,
> the trend of cord-cutting could escalate quickly. None of them would be
> endangering their cable revenue in the near-term, all immediate revenue would
> be "incremental." The damage would be done by slowly chipping away at the
> advantages of the television ecosystem. Moving enough programmed content away
> from TV to make consumers more comfortable not paying for bundled television."
During the (almost) year that transpired from when this article was written, we
have seen just this sort of mechanism in the works. We have seen CBS announce
All Access, we have seen ESPN putting extra content online (as opposed to
putting that extra content behind MVPD walls exclusively, as they definitely
would have done in the past), we have seen HBO getting set up to move content
outside MVPD walls. So this mere "speculation" is in fact taking shape, for
reasons that are precisely as the Motley Fool author says. To make that extra
revenue. Here is the specific quote, which sounds exactly like words uttered by
Moonves, Bewkes and by Skipper:
"If in the coming years cable subscriber numbers are slowly falling and cable
operators are beginning to resist affiliate fee increases, would you decline an
incremental revenue opportunity to move television-like programming off of
cable?"
So from our vantage point, 11 months later, surely no one can reasonably
dismiss the analysis as mere fiction? Even if this content is not all strictly
from this "the bundle," except for the CBS content for the time being, those
words I just quoted above are spot on. Subscribers dropped, and some content
got, or is getting, unwalled.
And too, this specific quote from the article also sounds familiar:
"Give consumers a 'good enough' alternative, and the speed at which they'll
adopt it has surprised many once-thriving industries."
So, it is not likely that being overly precise, about what "the bundle" content
moves out of the walls, makes a valid argument.
> And the Scripps Howard networks are NOT rarely watched; they could not see
> 10% year over year ad revenue increases if nobody was watching.
Not to pick on Scripps Howard per se, but the point the article made was that
the profits of these other "the bundle" channels are essentially fake. They are
not market value supported profits. Because these niche bundle channels are
given a free ride, customers are forced to pay whatever they ask (if these
customers are addicted to sports, as the article says).
Or put another way, if "the bundle" prices continue to go up, and all bets are
that they HAVE TO, for sports, people will continue to drop out. At some point,
when these other "the bundle" channels put their stuff online, to regain those
lost eyeballs that have found something similar and "good enough," their online
profits will more closely resemble market reality.
You can't fool the market forever. I just don't comprehend why Craig is
fighting this, instead of thinking up ways to make the new TV work to
everyone's advantage.
Bert
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