[opendtv] Re: Will Digital Passthru Effect Digital Tier Subscription?
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Wed, 1 Aug 2007 08:06:37 -0400
At 3:00 PM -0700 7/31/07, johnwillkie wrote:
So, broadcast is "as bad" as cable even though cable takes two bites of the
apple (underperforming on one, over-performing on another?)
I think you look hard and wide for villans, then not finding one in the
broadcast realm, you invent one. You tend to ignore the "villany" of the
cable double (or is it triple?) dip.
Let's look at this from a higher level John.
We have content and distribution. And we have some folks that do a
bit of both, creating a little content to go along with the stuff
that they are re-packaging for distribution.
We have five big media conglomerates that create content and own the
rights to 90% of all TV programming. A bunch of smaller companies own
the other 10%.
Cable, DBS, and the new Telco TV ventures are dependent upon the five
big media companies for their content and upon local broadcasters who
deliver the most valuable content from four of these conglomerates.
While these industries appear to compete with one another, they
actually operate as interdependent oligopolies. There is no
competitive pressure to lower rates - in fact, over the past decade
rates have increased at three times the inflation rate. It is now
common practice for content owners and in some cases their
distributors (i.e. broadcasters) to charge carriage fees that are
passed through directly to viewers. These revenues are in addition to
advertising revenues that are generated with the highest ad loads in
the history of the TV industry.
This is turn has caused many consumers to pay even more to watch
content mostly free of commercials via premium distribution - VOD,
PPV, DVD sales and rentals, and now downloads. Most of this content
is owned by the same conglomerates and the other tentacle of this
hydra, the Hollywood movie studios that have not been gobbled up by
the conglomerates.
All of this has come about thanks to the collaborative efforts of
these industries and the politicians and regulators that these
industries depend upon to enable and protect their oligopolies. Only
on rare occasions do the politicians/regulators put pressure on these
"constituents" to move from monopoly control to more open market
approaches as it relates to certain aspects of their businesses.
For example, Congress first legislated an attempt to open up the
market for cable set-top boxes as part of the 1992 Cable
re-regulation act. Then they asked again as part of the 1996 Telcom
Act. Here we are in 2007 and the cable industry and it's suppliers
still have monopoly control over these boxes.
And then there is the reconstruction of Ma Bell and the return to
total control over the attachment of devices to the cellular networks
that now are replacing the wired telco infrastructure.
In short, a century ago the politicians and big business moguls threw
in together to create Natural Monopolies, and we have been paying
through the nose ever since.
I'm certain John will attempt to put a positive spin on this,
elevating broadcasters onto the pedestal he worships. But he might
answer this simple question.
How can content creators and distributors make a profit with a
free-to-air multichannel TV service that derives virtually all of its
revenue from ads. No subscriber fees. Non monthly box rentals. No
control over the companies that build and sell the receivers.
How can Freeview survive John?
Regards
Craig
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