[opendtv] Time-Warner taking first steps towards ending TV content exclusivity

  • From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
  • To: <opendtv@xxxxxxxxxxxxx>
  • Date: Wed, 6 Feb 2008 12:19:20 -0500

There might be no actual "conspiracy," but the effect is the same. It is
these "exclusive contracts" that hurt FOTA TV in the US most, I think.
Not just because certain cable channels are exclusive to cable, but also
because of the deals the OTA broadcasters make with cable. Not to
mention deals with retailers and others in the food chain.

Somewhat related to this, I read recently that a large percentage of
satellite radio users would PREFER to have ads, or make that more ads,
aired over satellite radio, if that would mean ending the monthly fee.
So there is a market for both models, it seems.

Here's a thought. Take something like HBO. Make it available with ads
and without ads, over free and over subscription media. Then let's see
what equilibrium position emerges.

Bert

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February 01, 2008

Time-Warner taking first steps towards ending TV content exclusivity

By Cliff Roth

HBO's announcement that it will start offering its full line-up of TV
programs to online viewers may not sound like such a big deal, since
it's limited to only Internet users who get their broadband from
Time-Warner, HBO's parent company, and is further limited to only those
customers who subscribe to HBO. But it represents a milestone in
chipping away at TV distribution exclusivity. (See HBO to let
subscribers download TV shows, movies.)

Exclusivity is at the core of all TV programming business relationships
in the U.S. In the beginning, it was simply between a network and local
TV station affiliates having the exclusive right to carry the networks'
programs for that geographic area. As cable-TV came into the picture,
the concept was extended by cable networks to distribute their programs
exclusively through cable operators, and then later, through direct
broadcast satellites.

Lest anyone doubt how seriously these exclusive contracts are taken,
consider this: On any given day, at any given moment during prime time
(as well as many other parts of the day), each U.S. satellite
broadcaster -- Echostar/Dish and DirecTV -- devotes close to a thousand
channels of their precious satellite spectrum to just five programs,
which are repeated hundreds of times each. These five programs are from
CBS, NBC, ABC, FOX and PBS. Why does it require hundreds of satellite
channels to carry just five signals? Because rather than take feeds from
the networks, the satellite operators are legally required to honor the
exclusivity these networks have with their local affiliates, the TV
stations -- so they must carry the same signals, repeated hundreds of
times, each representing a different local TV station.

(Imagine how crazy, and impossible the situation would be if that
concept had been extended to carrying cable networks, like CNN and
Comedy Central, through feeds from their local affiliates, the local
cable systems!)

Time-Warner is indeed taking a baby step with their HBO-via-Internet
announcement. It was designed to offend no one, and ruffle no exclusive
deals -- yet. But as a first step towards the end of exclusivity, it may
prove much more significant. Ultimately, if they start offering these
programs for a separate fee over broadband, they'll be ending exclusive
distribution with local cable systems, something you wouldn't quite
expect from such a vertically integrated media conglomerate.

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